Prudential raised its guidance for the full fiscal 2009, based on its earning’s strength and current financial market conditions, including equity market levels, interest rates and credit spread. The company now expects earnings of $5.40 to $5.60 per share, elevated from the earlier range of $5.00 to $5.20 per share.

Net income for the Financial Services Businesses attributable to Prudential Financial Inc. was $1.09 billion or $2.35 per common share, compared to a net loss of $118 million 25 cents a share in the year-ago quarter. The company’s outstanding shares increased 9% year over year due to its stock offering in June.

Prudential’s U.S. Retirement Solutions and Investment Management segment posted a strong performance in the quarter. Adjusted operating earnings increased to $314 million, compared to a loss of $182 million in the year-ago quarter, driven by outstanding sales performance of Individual annuity business. Gross sales increased to $5.9 billion from $2.5 billion reported a year ago.

Adjusted operating earnings at U.S. Individual Life and Group Insurance segment came in at $307 million, down from $339 million a year ago. The downside was due to lower results of the group insurance business.

The International Insurance and Investments segment reported adjusted operating income of $513 million, up from $497 million earned in the prior-year period.

Assets under management increased to $641 billion at Sept 30, 2009 from $580 billion at June 30, 2009 and $558 billion at Dec 31, 2008.

Prudential’s Closed Block business includes in-force life insurance and annuity policies that were issued prior to the company going public in December 2001. This business reported net losses attributable to Prudential Financial Inc. of $8 million, compared with a loss of $58 million in the year-ago period. Prudential’s Class B stock reflects the performance of its Closed Block Business, which is not traded on any exchange.

Consolidated quarterly net income, including the results of both the Financial Services Businesses and the Closed Block Business, was $1.082 billion compared to a net loss of $176 million reported a year-ago.

Gross unrealized losses on general account fixed maturity investments of the Financial Services Businesses were $4.8 billion at Sept 30, 2009, significantly down from $11.3 billion at Dec 31, 2008.

Net unrealized gains were $979 million at Sept 30, 2009, compared to net unrealized losses of $6.6 billion at Dec 31, 2008. The company experienced pretax realized investment losses of $234 million, primarily reflecting losses from impairments and sales of credit-impaired investments. This was partially offset by increases in market value of certain investments in Europe.

Prudential’s products are very much sensitive to equity and credit market volatility. With the recent recovery in the market, the company was able to outperform in the reported quarter. We think the company will be able to maintain or improve its results in the upcoming quarters with a slow but gradual recovery of the overall economy.

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(PRU) Prudential Financial Beats, Ups Guidance

The year-over-year decrease in FFO was due to the negative impact of non-cash impairments and charges related to early debt repayment. Excluding the one-time charges, FFO for the quarter was $117.9 million or 31 cents per share compared to $182.8 million or 70 cents per share in the year-ago period.

Overall occupancy in Kimco’s combined shopping center portfolio was 92.4% at quarter end. In the U.S. portfolio, occupancy was 91.9%. During the quarter, Kimco executed a total of 634 leases spanning 2.1 million square feet, out of which 342 were new leases (1.0 million square feet) and 292 were lease renewals (1.1 million square feet). About 426 leases totaling 1.7 million square feet were executed in the U.S. portfolio – a 42% increase on square footage basis year-over-year.

Same-store net operating income (NOI) decreased 3.6% during the quarter year-over-year, primarily due to bankruptcies of Linens N Things, Circuit City and Value City. Same-store leasing spreads increased 1.3% in the U.S. largely due to a 2.1% increase for lease renewals, partially offset by a 0.2% decline for new leases.

During the quarter, Kimco realized $10.7 million of fee income from its investment management business. The company acquired the remaining 90% stake in one of its joint venture property for $23 million during the quarter. Subsequent to the end of the quarter, Kimco also acquired the remaining 85% interest in six unencumbered properties in Portland, Oregon, from its joint venture partner Prudential Real Estate Investors for $48 million.

Kimco monetized $23 million in mortgage receivables during the quarter through debt repayment of two mortgages. In addition, the company also liquidated its investments totaling $41 million in marketable securities in Burlington Coat Factory, Duane Reade, Innvest Real Estate and Toys R Us. Also during the quarter, Kimco issued $300 million of 10-year unsecured senior notes for net proceeds of $297.3 million, the bulk of which was utilized to repay unsecured term loan scheduled to mature in Apr 2011.

For full year 2009, Kimco anticipates FFO before non-recurring items in the range of $1.30 ? $1.33 per share, with an expected occupancy of approximately 92% in the U.S. portfolio.

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(KIM) Kimco Realty’s Funds From Operations Declines

Adjusted operating income before depreciation and amortization was $1.6 billion, up 4% year over year. This was primarily due to healthy growth in Digital Video, High-speed Data and Digital Phone revenue offset by higher video programming, employee and voice costs. Quarterly video programming expense was $1 billion, (up 6% year over year), Employee Cost was $911 million (up 4% year over year), and voice cost was $161 million (up 12% year over year). Quarterly GAAP operating income was $828 million, up 5% compared to the year-ago quarter.

During the reported quarter, Time Warner Cable generated $1,234 million of cash from operations, down 7% compare to the prior-year quarter. However, quarterly free cash flow (cash flow from operations less capital expenditure together with principal payment for capital lease and intangible assets) was $465 million, up 4% year over year. At the end of the third quarter, the company had $506 million of cash & cash equivalents and $22.2 billion of outstanding debt on its balance sheet compared to $5.5 billion of cash & cash equivalents and $17.7 billion of outstanding debt at the end of the previous year.

Subscription Segment

Total Subscription revenues in the third quarter were $4,316 million, up 5% year over year. Within this segment, Video revenues were $2,698 million (up 2% year over year), High-speed Data revenues was $1,138 million (up 8% year over year), and Voice revenues were $480 million (up 14% year over year).

Advertising Segment

Quarterly revenues stood at $182 million, down 19% year over year.

Subscriber Statistics

During the third quarter, Time Warner Cable added 8,000 Digital Video subscribers to 8.81 million. The company lost 84,000 Basic Video subscribers to 12,964 million, added 117,000 Residential high-speed data subscribers to 8.874 million, added 4,000 Commercial high-speed data subscribers to 0.293 million, added 62,000 Residential Digital phone subscribers to 4.078 million, and also added 10,000 Commercial Digital phone subscribers to 0.058 million. During the same quarter the company added 49,000 Triple play subscribers to 3.384 million, added 39,000 Double play subscribers to 4.873 million, and lost 113,000 Single play subscribers to 6.37 million.

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(TWC) Time Warner Cable Delivers

Excluding $5 million, or 2 cents of impairment charge, the company reported earnings of 38 cents per share in the third quarter of 2009, compared to a net income of 36 cents per share in the year-ago quarter.

However, total revenue fell 3.2% to $425 million from the year-ago quarter, primarily due weakness in product revenue, which fell 10.3% year over year to $191 million. This was offset by an increase in Services revenue, which rose 3.5% to $234 million in the quarter, driven by strength in the professional services business. Revenue includes a 1% negative impact from changes in foreign exchange rates.

On a regional basis, the company witnessed strong growth from the Europe, Middle East and Africa (EMEA) region, which grew 3% in the quarter, or 9% when adjusted for currency. This was offset by a 2% year-over-year decline in revenue from the Americas. The Asia Pacific region was deeply hurt, falling 14% — 17% when adjusted for currency.

Operating Performance

Operating income increased 2.3% year over year to $88 million due to improvement in the Services’ gross margin and lower SG&A expense, which more than offset the incremental investment in sales and the negative impact of currency translation.

Gross margin decreased to 53.4% in the quarter from 54.0% in the third quarter of 2008 due to lower product gross margin which fell to 62.3% from 64.3% in the year-ago period. However, Services gross margin improved to 46.2% from 44.2% in the year-ago quarter due to higher professional services margin. Amortization of software development costs was higher compared to the prior-year quarter, in line with expectations.

Balance Sheet

Teradata’s balance sheet remains strong with no debt. The company exited the quarter with $704 million in cash, a $66 million increase from the previous quarter. During the quarter, the company generated $96 million of cash from operating activities. Capital expenditures in the quarter were $21 million. As a result, the company generated $75 million of free cash flow in the quarter. In addition, the company used approximately $21 million of cash to repurchase approximately 830,000 shares.

Outlook Raised

Management raised its outlook for fiscal 2009 due to continued focus on operational execution, which is driving growth. On a non-GAAP basis, excluding 2 cents of impairment charge, earnings per share are expected to be in the $1.34 – $1.38 range, up from its previous outlook of $1.22 – $1.28. Revenues for the full year are expected to be down 1% to 3% on constant currency basis. Although the company expects SG&A expenses to be down from 2008, selling expense, research and development expenses as well as amortization of capitalized software costs are expected to be higher in the fourth quarter of 2009.

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(TDC) Teradata Corporation Tops Forecasts, Outlook Raised

Net income was $20.8 million, which significantly improved from a net loss of $9.8 million in the prior year quarter. Premium and fee income declined slightly to $342.6 million from $345.0 million in the prior year quarter. We expect premium and fee income to remain under pressure because of the recessionary conditions.

Delphi’s core group employee benefit premiums in the quarter were $329.8 million compared to $333.1 million in the prior year quarter, reflecting the impact of lower production at Reliance Standard. The loss ratio for the group employee benefits segment declined to 68.2% from 68.8% in the prior year quarter.

Delphi’s asset accumulation segment, which primarily focuses on individual fixed annuities, had new sales of $57.5 million, up from $44.0 million in last year’s third quarter. Funds under management at Sep 30, 2009, rose to $1.4 billion from $1.3 billion at Sep 30, 2008.

Improved yields in the company’s fixed income portfolio and improved performance from sharply reduced alternative asset portfolio led to an increase in net investment income to $88.7 million, compared to $19.4 million in the prior year quarter. Invested assets at Sep 30, 2009, were $5.7 billion compared to $4.8 billion at Sep 30, 2008. The tax equivalent yield on the company’s investment portfolio was 7.0%, compared to 2.0% in the prior year quarter.

Return on equity was 20.4%, compared to 4.8% in the prior year quarter. The improved market environment for fixed income securities increased book value per share to $23.99 from $18.69 in the prior year period.

The company has maintained its profitability over the last several years has established market presence in its core small to mid-sized employee benefits market, improved investment quality due to portfolio repositioning. With combined ratios lower than the earlier levels Delphi is expected to maintain its premium growth even this recessionary environment.

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(DFG) Delphi Financial Group Drives Ahead

Sales

Total sales in the reported quarter increased 6% year over year to $24.8 billion. Growth was witnessed across all the business segments.

Pharmaceutical segment revenues increased 5% year over year to $22.6 billion. Growth was primarily due to higher sales to existing pharmaceutical distribution customers. Sales to bulk customers increased 6% year over year to $11.3 billion. Sales to non-bulk customers increased 5% year over year to $11.2 billion.

Medical segment revenues increased 10% year over year to $2.2 billion. Growth can be primarily attributed to higher sales to existing customers. In addition, the CareFusion Corp. (CFN) spin-off has resulted in immediate revenue recognition from international sales to CareFusion.

Margins

Cardinal Health registered a minimal contraction in margins. Gross margin declined 10 basis points (bps) year over year to 3.7%. Distribution, selling, general and administrative expenses as a percentage of sales declined 10 bps year over year to 2.4%. Operating margin declined 20 bps year over year to 1.0%.

Balance Sheet & Cash Flow

Cardinal Health ended the reported quarter with cash and cash equivalents of roughly $1.6 billion, an increase of 30% sequentially. Cash flow from operations was $0.4 billion.

Guidance

Cardinal Health expects earnings per share to be at the higher end of its prior guidance of $1.90 to $2.

Cardinal Health is one of the largest global healthcare companies that helps pharmacies, hospitals and ambulatory care sites to focus on low-cost patient care. The company is also a leading manufacturer of medical and surgical products. The company recently completed the spin-off of its Clinical and Medical Products business to form a subsidiary, CareFusion Corporation. The spin-off was completed through a pro rata distribution of roughly 81% of CareFusion’s common stock.

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(CAH) Cardinal Health Eclipses Consensus Estimates

The deep-discount store operator’s sales posted a growth of 2.2% year over year to $324.7 million, as customers affected by continuing macroeconomic headwinds preferred to shop more in its stores. The City of Commerce, CA-based retailer’s same-store sales grew by 2.3% over the same period.

Non-Texas Operations

99 Cents revenues from non-Texas operations grew 4.0% year over year to $296.4 million driven by same-store sales growth of nearly 1% coupled with the effect of opening 11 new stores in fiscal 2009 and 3 in fiscal 2010. Non-Texas operations include California, Arizona, and Nevada where the company currently operates 240 stores and generates about 91% of overall sales. Gross margin expanded 110 basis points (bps) year over year to 40.3%. This growth was mainly caused by favorable product mix, efforts to drive sale of higher margin products and improved purchase cost margin on account of price increases.

Operating expenses, as a percentage of sales, decreased 310 bps to 33.2% reflecting management’s cost management initiatives, which lowered store labor costs, corporate expenses as well as distribution and transportation costs. Accordingly, operating margin came in at 5.0%, recording a strong growth of 430 bps over the year-ago quarter.

Texas Operations

Texas operations posted a 13.7% year over year reduction in revenues to $28.3 million, despite a 19.8% growth in same-store sales, as the company closed 17 stores in the region since fiscal 2009 fourth quarter. The company announced in September last year the planned closure of its 48 stores in Texas due to continued underperformance. However, in January this year management decided to continue operations citing a turnaround in the region. Meanwhile, gross margin grew 280 bps to 36.1% mainly due to reduced merchandise purchase cost coupled with a decrease in shrinkage and freight rates.

Operating expenses, as a percentage of sales, declined to 33.4%, compared to 68.3% last year. The year-ago quarter’s selling, general and administrative expenses included a $10.1 million impairment charge (30.8% of sales) related to the company’s decision to exit the Texas market. Accordingly, the company recorded an operating income of $0.1 million, helped by reduced depreciation as a result of permanent impairment of certain Texas assets over the past year, compared to an operating loss of $13.8 million last year.

Balance Sheet

The company has a healthy balance sheet, which is devoid of any debt. Cash and short term investments at the end of the quarter was $128.2 million, compared to $83.4 million in the year-ago period due to the strong earnings performance.  During the first half of the current fiscal, 99 Cents utilized $18.8 million and $13.2 million towards capital expenditure and purchase of investments, respectively.

Outlook

Moving forward, management anticipates same-store sales to expand by low single digits during fiscal third quarter. Furthermore, gross margin is expected to improve further due to the holiday season product mix shifts. The company plans to open 10 to 12 stores in the entire fiscal year with openings skewed towards the second-half.

Meanwhile, the Zacks Consensus Estimate, derived from 11 covering analysts, for the full fiscal year has remained constant over the past 2 months at 57 cents per share. The most accurate estimate is more bullish at 59 cents per share.

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(NDN) 99 Cents Only Stores Posts Strong Q2 Earnings Report

Net sales in the third quarter were SEK 46.4 billion ($6.6 billion). Sales in the quarter decreased 4% year-over-year for comparable units, i.e. excluding Ericsson Mobile Platforms, and decreased 12% adjusted for currency exchange rate effects and hedging. The third quarter last year was comparatively strong with no normal seasonality.

Sequential sales decreased 11%, negatively impacted by currency exchange rate effects, seasonality and a reduced scope of the renewed managed services agreement in Italy.

Network sales in the third quarter declined year-over-year by 8%. Even though the comparison is tough with last year’s strong third quarter, the market was weaker. The markets are fairly strong in the world’s leading economies, while demand is weaker in several emerging markets affected by the present economic climate.

Professional Services sales increased 9% year-over-year. Growth in local currencies amounted to 4%. Total service sales, including network rollout, now account for 40% of Group sales. In the present financial climate there is strong demand for services targeting the operational efficiency of operators such as managed services and consulting.

However, managed services sales increased by just 3% year-over-year due to the reduced scope of the renewed agreement in Italy. Other professional services sales increased by 11% year-over-year.

The gross margin, was flat sequentially despite the lower sales, and decreased only slightly year-over-year to 36.2%.

Ericsson is a world-leading provider of telecommunications equipment and related services to mobile and fixed network operators globally. Over 1,000 networks in more than 175 countries utilize its network equipment and 40 percent of all mobile calls are made through its systems. It is one of the few companies worldwide that can offer end-to-end solutions for all major mobile communication standards.

We currently have a Neutral recommendation on ERIC.

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(ERIC) LM Ericsson Telephone Company Beats Estimates

Despite the increased production volumes and lower production expenses, earnings were down due primarily to weak realized prices. Revenue for the quarter was $410.1 million, down nearly 32% from the year-earlier level.

Total production for the quarter averaged approximately 113 thousand barrels oil equivalent per day (MBOE/d), up 2% year over year, reflecting the strong performance of Pioneer’s low-decline assets. Oil production averaged at 31.7 thousand barrels per day (MBbl/d), up approximately 7% year over year. Natural gas liquids production slightly decreased to 18.6 MBbl/d. Natural gas production also modestly increased to 374.2 MMcf/d.

On an oil equivalent basis, average realized price was $39.57 per barrel versus $59.04 per barrel in the year-ago quarter. Average realized price for oil in the quarter was $78.20, compared to $80.37 in the third quarter of 2008. Average natural gas price was to $3.64 per Mcf, significantly down from the year-earlier level of $7.98 per Mcf.

Year-to-date, all geographical production areas experienced growth. Production from the Spraberry field (in West Texas), South Texas area, Tunisia and South Africa increased 8%, 4%, 13% and 51%, respectively, from the same period in the last year.

At the end of the quarter, cash balance was nearly $56 million. Long-term debt balance stood at $2.87 billion, representing debt-to-capitalization ratio of 44.8%.

The company is guiding towards fourth quarter production ranging between 105 MBOE/d to 110 MBOE/d. Production costs are expected to average $11.50 to $13.50 per BOE and DD&A expense is expected to average $15.50 to $17.00 per BOE.

Based on the uptrend in oil prices and the solid hedging position, management is confident about the company’s operating cash flow generating capacity to the tune of $1 billion and $1.4 billion in 2010 and 2011, respectively. The company hinted that it will ramp up its production activity in the Spraberry field and will continue its successful oil development program in Alaska.

After having underperformed the peer group for last few years, the company is gaining investor attention with its attractive production growth and resource potential. Another potential catalyst for the company is its ongoing cost reduction initiatives. However, while we like Pioneer’s efforts of reducing debt level, there are other names in the group that have asset bases better positioned to deliver growth. We recommend a Neutral rating for the stock.

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(PXD) Pioneer Natural Resources Company Misses Forecasts, but Volumes are up

The company swung to a GAAP net income of $60 million or 28 cents per share compared to $69 million or 33 cents in the prior quarter and $58 million or 27 cents in the year-ago period. Results included one-time charges counting $25 million in debt conversion expense, $16 million in pre-tax expenses associated with asset retirements, workforce reductions and other non-recurring items, and $5 million in pre-tax merger expenses.

Excluding these charges, pro forma earnings per share came in at 42 cents, in line with the Zacks Consensus forecast. Results were aided by growth in the company’s core businesses and significant progress from new initiatives.

Net revenue (net of liquidity rebates, brokerage, clearance and exchange fees) slipped 4.9% sequentially and 12.5% year over year to $349 million. The decline was primarily attributable to foreign currency fluctuations. The company continued to expand its Market Technology business following its selection as the strategic technology provider to the Osaka Securities Exchange (OSE) and the Kuwait Stock Exchange (KSE).

Total operating expenses decreased 11.3% year over year to $197 million primarily due to lower compensation expense, marketing and advertising expense, reduced expenses for computer operations and data transmission, besides lower general, administrative and other expense.

Nasdaq has updated its 2009 guidance for total operating expenses to a range of $840 million to $850 million, including approximately $50 million in non-recurring costs.

The company reduced total principal amount of debt obligations by $232 million to $452 million at the end of the quarter. The reduction was attributable to the repayment of $113 million on $2.0 billion term loan and the conversion of $119 million of 3.75% convertible notes held by Silver Lake and another holder into common equity.

The world’s largest exchange, which operates across 70 bourses in more than 50 countries, offers trading, clearing and settlement in equities, futures, options, fixed-income and exchange-traded products.

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(NDAQ) Nasdaq OMX Group Reports In-Line With Forecasts

Net interest revenue totaled $180.5 million, up 2.8% sequentially and 9.8% year-over-year. Net interest margin was 3.63%, up 8 basis points (bps) sequentially and 15 bps year-over-year. The increase in net interest margin over the previous quarter resulted from improved loan pricing and lower funding costs.

Outstanding loan balances were $11.6 billion at Sep 30, 2009, down $458 million since Jun 30, 2009. All major loan categories decreased during the quarter largely due to reduced customer demand, normal repayment trends and management decisions to exit certain loan types. Average deposits decreased $202 million from the prior-year quarter to $15.1 billion, due primarily to a $719 million decrease in average time deposits.

Credit metrics continued to expand negatively overall. Non-performing assets continued to increase across most sectors of the loan portfolio and geographic markets during the quarter. Non-performing assets equaled 4.19% of the loan portfolio plus other real estate owned assets, up 52 bps sequentially and 221 bps year-over-year. Net charge-offs as a percentage of average loans were 121 bps, up 8 bps sequentially and 57 bps year-over-year. Provision for loan losses increased to $55.1 million from $47.1 million in the prior quarter and $52.7 million in the year-ago quarter.

Fees and commissions revenue totaled $120.0 million, down 2.6% sequentially and 5.3% year-over-year. On a sequential basis, mortgage loan originations was down as the impact of government initiatives to lower national mortgage interest rates began to lessen. The decrease in mortgage-banking revenue was partially offset by growth in brokerage and trading revenue and deposit service charges.

Core expenses (excluding the impact of the change in the fair value of the mortgage servicing rights and the FDIC special assessment) were $175.7 million, up 2.3% sequentially and 10.7% year-over-year. Though personal expenses were up in the quarter, all other operating expenses were down due to company-wide initiatives to control operating expenses.

The increase in tangible common equity  ratio was primarily due to retained earnings growth and reduced net unrealized losses on available- for- sale securities. Tangible common equity ratio and tier 1 common equity ratio increased to 7.78% and 10.45%, respectively, at Sep 30, 2009, from 7.55% and 9.77%, respectively, at Jun 30, 2009, mainly because of lower unrealized losses on securities. Tier 1 capital ratios were 10.56% at Sep 30, 2009, compared to 9.86% at Jun 30, 2009. The company chose not to participate in the Treasury’s Capital Purchase Program, as its own capital levels are adequate for its operations and expansion.

Though quarterly results reflected growth in interest revenue and margin and the benefits of the cost containment measures, we note that the credit quality continued to deteriorate in the quarter with a significant increase in non-performing assets. Given the current economic environment, we do not expect any significant improvement in the asset quality in the next couple of quarters. Nevertheless, BOK Financial’s diverse revenue stream and operating platform should benefit it going forward.

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(BOKF) BOK Financial Corporation Beats Consensus Forecasts

The U.S. Government’s “Cash for Clunkers” cash incentive program for fuel-efficient vehicles helped the auto retailer gain in the same-store gross margin. In the quarter, same-store gross margin improved to 17% from 16% in the prior-year quarter. Group 1 retailed 25,057 new vehicles during the quarter, of which 4,874 vehicles were channeled through the Clunkers program.

Group 1’s margin improvement in used vehicle as well as in parts and service business also helped gain the overall margin. Same-store used vehicle gross margin increased $228 per wholesale unit, as limited supply increased valuation. However, retail gross margins fell to 10.3% from 10.6% in the prior year as more vehicles were sourced at auction. The same-store parts and service business bettered on a year-over-year basis, with a gross margin of 53.7% compared to 53.3% in the previous year quarter.

Group 1 had cash and cash equivalents of $14.9 million as on Sep 30, 2009, compared to $23.1 million on Dec 31, 2008. Long-term debt nearly halved to $33.3 million as on Sep 30, 2009 from $64 million as on Dec 31, 2008. In the first nine months of 2009, the company’s net cash flow from operating activities remained almost flat at $54.8 million compared to $54.3 million in the year ago period.

Going forward, Group 1 expects new vehicle margins of 6%–6.5% and used vehicle retail margins of 10%–10.5%. For full year, the company anticipates earnings in the range of $1.66–$1.76 per share. This is consistent with the Zacks Consensus Estimate of $1.75 per share.

Group 1 Automotive is a Houston, Texas based retailer. It owns and operates 96 automotive dealerships, 128 franchises and 23 collision service centers in the U.S. and the U.K, offering 31 brands of automobiles. Through its dealerships, the company sells new and used cars and light trucks, arranges related financing, vehicle service and insurance contracts, provides maintenance and repair services and sells replacement parts.

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(GPI) Group 1 Automotive’s Profit Improves

Molecular diagnostic revenues for the quarter came in at $85.12 million as against $69.97 million in the prior-year quarter, a 21.6% increase. The improvement was attributable mainly to Myriad’s increased sales and marketing efforts.

However, revenue growth has slowed in the recent quarters due to the recession. Myriad has undertaken several measures, including adding new sales representatives, to reinvigorate sales.

Gross profit for the quarter came in at $74.1 million, or 87% of molecular diagnostic revenues, as against $60.2 million, or 86% of molecular diagnostic revenues last year. The margin growth was primarily attributable to improvements in technology coupled with efficiency gains in the operation of the molecular diagnostics laboratory.

Research and development expenses for the quarter stood at $5.7 million as against $4.4 million for the same period last year. The 29.5% increase was attributable to the increased investment in its product pipeline and new product development.

Selling, general and administrative expense for the quarter came in at $38.7 million compared with $32.4 million in the prior-year quarter. The 19.4% increase was attributable to the costs associated with the revenue growth in the quarter.

We believe that selling, general and administrative expenses will continue to fluctuate in the coming quarters due to new product launches and future non-cash stock option expense.

The company exited the quarter with approximately $417.0 million in cash, cash equivalents and marketable investment securities, as against $392.2 million at June 30, 2009.

We remind investors that the company had spun off its therapeutics business in July 2009 to exclusively focus on its core molecular diagnostics business. Consequently, Myriad Genetics will be able to pursue its long-term strategic initiatives, maximize its core technology strengths, seek new product  opportunities and have a capital structure appropriate for its financial profile.

Currently, we have an Underperform rating on the stock.

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(MYGN) Myriad Genetics Inc Misses Forecasts by a Penny

Operating income for the quarter was $39.3 million compared to $53.2 million for the same period in 2008. There was a net loss of $4.8 million for the third quarter of 2009 compared to net income of $1.8 million for the third quarter of 2008.

Adjusted EBITDA was $122.5 million versus $134.5 million for the third quarter of 2008, an 8.9% decrease. Free cash flow was $83.0 million compared to $42.9 million for the same period in 2008, a 93.4% increase.

Lamar is a leading owner and operator of outdoor advertising and logo sign displays. Lamar has grown its localized billboard advertising business through a combination of organic growth and strategic acquisitions.

After the current recession passes, the company should benefit from any rebound in demand for local advertising, which should lead to higher occupancy and increased advertising rates for the company’s billboard businesses. The company’s internal and external investment activities have allowed it to capture a considerable share of localized outdoor advertising markets, which account for more than 80% of its annualized net revenue.

Given the company’s large and growing national presence, there is additional upside going forward as the company builds up its national sales presence and expands relationships with larger, national advertisers.

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(LAMR) Lamar Advertising Company Hurt by Economic Situation

Outside the U.S., Acorda has partnered with Biogen Idec under very favorable terms. Fampridine-SR has blockbuster potential worldwide in our view. Plus, the company is extremely well-capitalized with over $290 million in cash, and management has commercial experience with current approved product Zanaflex.

These are among the best fundamentals in all of biotech. We reiterate our Outperform rating on the stock.

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(ACOR) Acorda Therapeutics – Bull of the Day

Quarterly Results

Revenues for the reported quarter came in at $1.9 billion as against $1.81 billion in the year-ago quarter, representing an increase of 4.7%. However, revenues grew 8%. excluding the unfavorable impact from foreign currency translation.

In terms of business segments, worldwide BD Medical revenues increased 8.2% to $1.01 billion in the quarter. The growth was driven by strong sales of Pharmaceutical Systems products, coupled with solid sales of Medical Surgical Systems products. Excluding the unfavorable impact from foreign currency translation, revenues increased 13%.

Global revenues at the BD Diagnostics segment in the quarter increased 4.9% or 8% excluding the unfavorable impact from foreign currency translation to $580.0 million. Growth was driven by sales of safety-engineered devices, cancer diagnostics products and infectious disease testing systems, including flu-related products.

Worldwide revenues at the BD Biosciences segment came in at $312.2 million for the quarter. This represented a year-over-year decline of 5.2% or a decrease of 4 % excluding the unfavorable impact from foreign currency translation. Funding constraints impacted demand in the U.S. for capital equipment in the research and clinical segments.

Becton derives a bulk of its revenues from international operations. International revenues accounted for roughly 56% of total revenues.

Fiscal Year Results

Total revenues for fiscal 2009 came in at $7.16 billion, up 1.2% from $7.07 billion reported in the year-ago quarter. Revenues grew 5% excluding the unfavorable impact from foreign currency translation. International revenues accounted for roughly 55% of total revenues in fiscal 2009, which was roughly identical to fiscal 2008.

Outlook

Becton expects revenues for the full fiscal year 2010 to increase approximately 6%, or 5% to 6% excluding the estimated favorable impact from foreign currency translation.

Furthermore, the company projects earnings to grow approximately 1%?3% over the fiscal 2009 earnings, or 7%?9% excluding the estimated unfavorable impact from foreign currency translation.

Currently, we are Neutral on Becton.

Zacks Investment Research
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(BDX) Becton, Dickinson and Co Reports Strong Results

We expect revenue in 2009 to be hurt by weak consumer spending and the poor global economy, and believe the company will struggle to meet expectations in fiscal 2010. We maintain our estimates for the full year 2009. 2011 estimates have been added.

We also maintain our Underperform recommendation on CAJ shares, but increased our six-month target price to $30.00.

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(CAJ) Canon, Incorporated – Bear of the Day

Company Description

Nu Skin Enterprises is a $1 billion direct selling company that markets and distributes premium quality personal care, nutrition and technology products through a global network of more than 750,000 active independent distributors and preferred customers. The company operates three core brands, Nu Skin, Pharmanex, and Big Planet.

The Nu Skin brand has a line of more than 100 premium skin treatment and other personal care products. With a team of more than 100 in-house scientists, Pharmanex uses a pharmaceutical approach that is setting the standard for the dietary supplement industry. Big Planet brings the benefits of technology to everyone with innovative products like Maxvault, a line of products that provide the easiest way to preserve, organize, share, and enjoy your photos and home movies.

Nu Skin Enterprises operates in 48 international markets across the Americas, the Asia Pacific region and Europe, with more than 75 percent of revenue coming from Asia.

A Record Quarter and Bullish Forecasts

The company recently posted record results for the third quarter. Earnings per share of 41 cents topped the previous year’s 26 cents and matched the Zacks Consensus Estimate. Revenue was a record $334.2 million, an increase of 8% year-over-year.

Nu Skin boosted its annual earnings guidance to $1.38 to $1.40 per share. The company sees fourth-quarter earnings coming in 32 to 34 cents per share.

Analysts polled by Zacks are calling for 2009 earnings of $1.41 per share, a penny higher than last week and above last month’s $1.28.

For the fourth quarter, the Zacks Consensus Estimate of 36 cents per share is up a penny from last week and 5 cents above last month’s projection.

Outstanding Fundamentals

Nu Skin’s return on equity (ROE) of 25% dwarfs the industry average of 6%. The company’s net profit margin of 6% tops the industry average of 3%. Nu Skin pays an industry -leading dividend yield of 2%.

Zacks Investment Research
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(NUS) Nu Skin Enterprises – ROE of 25% Dwarfs the Industry Average of 6%

Net sales dipped 22% to $409.6 million. However, in absolute terms, it is the highest quarterly sales of the year. The lower sales were on the back of a 18% decline in customer production volumes for the North American light truck and sport utility vehicle (SUV) programs that American Axle currently supports for GM and Chrysler.

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) fell to $1,396 from $1,453 in the third quarter of 2008. Non-GM sales constituted 18.3% of total sales in the reported quarter. The company’s non-GM sales stood at 21.6% of total sales on a year-to-date basis.

American Axle had cash and cash equivalents of $173 million as of Sept. 30, 2009, compared to $198.8 million as of Dec. 31, 2008. Long-term debt amounted to $1.18 billion as of Sept. 30, 2009.

In the first nine months of 2009, American Axle had a net cash outflow from operating activities of $19.7 million, an improvement of $77.6 million from the prior-year period. Meanwhile, capital expenditures increased to $115.5 million from $102.8 million in the year-ago period.

American Axle is a Detroit, Michigan-based company and a leader in the supply of driveline systems, modules and components for the light vehicle market. The company manufactures axles, driveshafts and chassis components for light trucks, SUVs and passenger cars. It was hit badly by the bankruptcies of General Motors and Chrysler due its high reliance on these companies. We continue to recommend the shares of the company as Neutral.

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(AXL) American Axle Reports Better than Expected Results

Company Description

Odyssey Healthcare, Inc. provides hospice care services focused on palliative care for patients with life-limiting illnesses. Care is directed at managing pain and other discomforting symptoms and addressing the psychosocial and spiritual needs of patients and their families.

Crushed Estimates

Odyssey reported third-quarter results on Oct 28 that took analysts by surprise. The company reported earnings per share of 35 cents, well above the 25 cents Wall Street expected. This was the hospice provider’s third consecutive earnings surprise.

Net income, of $11.6 million, was nearly double the previous year’s $5.9 million. Odyssey’s CEO, Robert Lefton, credited higher patient volume and controlling expenses for the successful quarter.

Explosive Growth

In the past month there 13 upward revisions were submitted for full-year 2009, this is from just 7 analysts. The Zacks Consensus Estimate for the year is now $1.16, up from $1.03. This would be good enough for a 97% year-over-year growth.

Next year’s estimates are also rising. The average forecast for 2010 is currently $1.21, up 14 cents in the same period of time. This would be good for another 4% growth.

Valuations

The stock is trading at a nice value, just 12 times forward earnings. Given the growth rate, the PEG ratio is just 0.9.

The Chart

Shares of ODSY jumped violently on the earnings release, but are now consolidating and showing much less volatility. Take a look at the chart below.

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(ODSY) Odyssey Healthcare Inc. – Topped Earnings Forecasts by 40%

In the reported quarter, Evergreen improved its manufacturing cost to $2.24 per watt from $2.70 per watt in the second quarter of fiscal 2009. Similarly, wafer manufacturing cost also fell to approximately 75 cents per watt from 85 cents per watt in the second quarter of fiscal 2009.

Evergreen clocked revenues of $77.7 million in the reported quarter, compared to $63.8 million in the previous quarter and $22.1 million in the year-ago quarter. Product sales for the quarter were $75.5 million while royalty and fee revenues were $2.2 million. Gross margin rose to 9.7% in the reported quarter from 1.9% in the prior quarter and 5.7% in the year ago quarter.

Operating loss reduced to $6 million in the reported quarter from $22.1 million in the year-ago quarter. However, in the reported quarter, the company absorbed a charge of $79.4 million for the write-down of its investment in the Sovello joint venture. As a result, net loss for the reported quarter escalated to $82.4 million from net loss of only $24.6 million in the year ago quarter.

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(ESLR) Evergreen Solar’s Loss Narrows

MoneyGram Rewards were expanded earlier this year into Germany, Spain and France. It was first introduced in the U.S. in 2008 and now has more than 3.5 million customers who enjoy the benefits of membership, which include discounted transactions, a personalized card for expediting money transfers, quarterly statements and the ability to manage one’s account and profile online.

Further in September, MoneyGram added a feature to the program that allows members to be notified via SMS text message when their money transfer transaction has been picked up by the receiver.

The expansion of the program is a part of MoneyGram’s growth plans in Canada. In July, the company announced the roll-out of thousands of additional Canada Post locations, resulting in MoneyGram money transfer services available at more than 5,000 Canada Post outlets coast to coast.

On Oct 30, MoneyGram reported third-quarter loss of 25 cents, substantially short of the Zacks Consensus estimate of 3 cents. The downside was mainly due to $37.4 million in one-time costs for a patent lawsuit, a legal settlement with the Federal Trade Commission, stock-based compensation and severance costs, asset write-downs and securities gains.

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(MGI) MoneyGram International Rewards Program Reaches Canada

The Grain & Ethanol Group’s revenues fell 30.8% during the quarter due to continued weakness in commodity prices. The segment’s operating income was down 6.0% at $8.9 million compared to $9.4 million last year. While the income from grain business was down significantly during the quarter, the ethanol business benefited from improved margins and from the finalization of The Andersons Albion Ethanol LLC business interruption claim.

The Rail Group’s revenues of $21.2 million were down 25.5% from $28.4 million last year. The segment posted an operating loss $1.1 million in the quarter, compared to operating income of $5.2 million in the third quarter of 2008, due to continued double digit declines in rail traffic, as well as a decline in average utilization rate to 74.4% from 93.3% in the prior-year quarter. The decline in utilization rates resulted in higher storage expense due to idle assets, increase in maintenance costs, and lower leasing rates.

The Plant Nutrient Group continues to suffer from deflation in basic nutrient prices. The group posted on operating loss of $2.8 million on revenues of $70.4 million, compared to operating income of $7.2 million on revenues of $162 million in the third quarter of 2008. The sales volumes were down due to continued de-stocking of the retail dealer inventory.

The Turf and Specialty Group posted similar results compared to last year. The current quarter saw an operating loss of $0.3 million on revenues of $21.5 million, while the group posted an operating loss of $0.5 million on revenues of $23.2 million in the comparable quarter of 2008.

Lower consumer spending remains a problem for the Anderson’s Retail Group. Revenues dropped 9.5% to $37.2 million from $41.1 million in the prior-year period. The segment posted an operating loss of $2.3 million, compared to operating loss of $0.2 million last year.

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(ANDE) The Andersons’ Earnings Report is Well Behind Estimates

The U.S. Transmission segment posted earnings before interest and taxes (EBIT) of $239 million, up more than 10% year over year. The segment benefited from business expansion projects and capitalization of previously expensed project development costs. These positives were partially offset by lower gas processing revenues as a result of lower prices and volumes. Distribution segment reported EBIT of $48 million, up 9% year over year, driven by higher storage and transportation revenues.

Western Canada Transmission & Processing segment reported EBIT of $84 million, down 25.7% from the year-earlier level. Improved revenues in the fee-based gathering and processing business were more than offset by lower Empress System earnings, primarily as a result of lower fractionation spreads. Fractionation spreads at Empress System averaged $6.75 for the quarter, down 38% from the year-ago level.

Field Services segment reported EBIT of $45 million, decreased significantly from the year-earlier quarter due to lower commodity prices.

During the quarter, crude oil averaged approximately $68 per barrel, down more than 42% year over year. Natural gas liquids (NGL) to crude relationship averaged 42% versus 51% in third quarter 2008.

At the end of the reported quarter, long-term debt stood at $9.35 billion. This represents a debt-to-capitalization ratio of 55.5%.

Management hinted that Spectra is on track to meet the financial goals it had set for the year, including the 2009 EPS target of $1.15. Based on the operational performance and momentum of the company’s future expansion projects, we believe that Spectra remains in a position to experience earnings growth in 2010 and beyond.

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(SE) Spectra Energy Corporation Surpasses Consensus Estimates

We are pleased to see the robust performance of the pharmacy services segment during the reported quarter. Revenues increased 23.4% to $13 billion. Revenue growth would have been higher at 27.2% but for the recent generic introductions. While pharmacy netwok claims processed during the quarter increased 9% year over year to 146.5 million due to the addition of RxAmerica claims and new client wins, offset partially by a reduction in claims due to the termination of two large contracts (effective beginning of 2009), mail choice claims increased 11.4% to 16.4 million.

The performance of the retail pharmacy business is also quite commendable. Revenues increased 17.9% to $13.6 billion in the third quarter. Despite industry wide pricing pressure in the pharmacy business, results over the past several quarters have demonstrated strong sales trends with comparable same-store sales growing at solid rates.

Same-store sales increased 5.7% over the prior-year period. While pharmacy same store sales rose 8%, front end same store sales increased 0.8%. Pharmacy same store sales were negatively impacted by 380 basis points due to recent generic introductions whereas Maintenance Choice program had a positive impact of 250 basis points. Generic dispensing rate increased both in the pharmacy services and retail segment by 320 basis points to 68.3% and 210 basis points to 70.1%, respectively.

Based on the strong third quarter performance, CVS Caremark increased the lower end of its guidance for 2009. The company now expects earnings per share in the range of $2.61-$2.64, up from the previous guidance of $2.59-$2.64.

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(CVS) CVS Caremark Beats The Street by a Penny

Adjusted net income surged to $269.1 million from $82.8 million registered in the year-ago quarter, driven by the contributions from Embarq. Reported net income (GAAP) of $280.8 million or 94 cents per share, reflects an increase from $84.7 million or 83 cents per share registered a year ago.

Revenue: The company reported operating revenue of $1.87 billion, a significant increase compared to $650 million reported a year ago, fuelled by the Embarq acquisition which contributed $1.3 billion in the quarter. Revenues for voice, network access and data services increased compared to the year-ago quarter.

Subscriber Total access lines at the end of the quarter were 7.19 million (including Embarq’s access lines) compared to 2.07 million a year-ago. CenturyLink added more than 43,500 high-speed Internet customers during the quarter (a 52% sequential increase), bringing the total high-speed Internet subscriber base to 2.19 million.

Dividend & Cash Flow: CenturyLink paid a cash dividend of $0.70 per share in the third quarter leveraging healthy free cash flow which registered approximately $372 million in the quarter, excluding non-recurring items and acquisition related capital expenditures.

Outlook: CenturyLink has released its guidance for fourth-quarter 2009. The company expects consolidated revenues (including Embarq’s contribution) of $1.81-$1.85 billion and projects earnings per share in the range of 84 cents to 88 cents. For full-year 2009, CenturyLink expects earnings per share in the range of $3.45 to $3.50, an increase from $3.20 to $3.30 as per previous expectation.

The company expects to achieve cost synergies of $12 million from the Embarq acquisition in the fourth quarter. CenturyLink emerged as one of the largest rural telecom carriers in the US following its acquisition of Embarq Inc in Jul 2009. The acquisition will be accretive to the integrated company’s free cash flow in 2010, the first full year following the completion of the transaction.

While the merger with Embarq may ultimately yield a number of operational benefits and cost synergies, significant integration challenges may impede near-term operating performance. In our opinion, growth momentum for CenturyLink’s broadband Internet business is more than offset by losses in wireline voice business and higher cash outlays.

The company continues to experience organic decline in voice access lines as it contends with burgeoning competition from other service offerings from cable operators, such as VoIP services. Moreover, CenturyLink operates with high debt (approximately $8.2 billion), primarily due to the assumption of $5.8 billion of Embarq debt.

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(CTL) CenturyLink’s Third Quarter Earnings Outperform

When the opening bell rang on Tuesday morning, as the broader market sagged, shares of Dendreon Corp. (Nasdaq: DNDN) sprinted out of the gates, rising by 5.7%.

Unless you live in a cave, you should know about this biotech stock.

Back in April, shares went “parabolic,” blasting 454% higher during the month.

(That’s not a typo. The stock increased almost five-fold over the course of a single month, rendering the S&P 500’s 10% gain over the same period completely insignificant.)

With an impressive move like that, you might think the run is over. But shares will likely head higher still…

You see, Dendreon is blazing a brand new path in biotech. Its prostate cancer drug, Provenge, which it just submitted to the FDA for approval, is the first of its kind. Known as an active immunotherapy, it trains a patient’s immune system to attack deadly cancer cells instead of relying on surgery, radiation treatment, or an injected drug to wipe them out.

In laymen’s terms, Provenge is a cancer vaccine. And the growth for such vaccines is expected to soar by roughly 30% per year through 2012, according to the research firm, RNCOS, Inc. At such a rapid rate, cancer vaccines will account for one-quarter of the global vaccine market.

The good news is that Dendreon isn’t the only player in the space. After all, we’ll need more than one immunotherapy to help combat the 12 million new cancer patients annually. And Dendreon’s success is opening the door for other companies developing immunotherapy treatments that might not otherwise get a chance.

Today, our small and micro-cap specialist Louis Basenese reveals one such company, delivering promising early clinical results, which he believes could ultimately lead to similar profits like those of  investors in Dendreon Corp.

A 454% return or more? That’s a bold claim, no doubt. So check in with Louis to find out how it’s possible.

Ahead of the tape,

Robert Williams

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(DNDN) Dendreon’s Reached Orbit – Now Who’s Next?

JPMorgan Securities Inc, a division of JPMorgan Chase & Company, and two of its former managing directors, Charles LeCroy and Douglas MacFaddin, made those unlawful payments to win business and earn fees. The scandal was over the county’s debt of around $4 billion which was pushing the county into the biggest municipal bankruptcy in U.S. history.

JPMorgan Securities has agreed to pay a fine of $25 million and $50 million to Jefferson County . The company will also lose more than $647 million in claimed termination fees on the swaps.

JPMorgan, LeCroy and MacFaddin were alleged to have made undisclosed payments of about $8 million to close friends of several Jefferson County commissioners. Since July 2002, these two managing directors have solicited the county for a $1.4 billion sewer bond deal.

As a result of the undisclosed payments, the commissioners of the country selected JPMorgan Securities as the managing underwriter of the bond offerings.

In July, the SEC proposed tightening rules governing disclosures about municipal securities to aid investors in a multitrillion-dollar market used to finance schools, roads and hospitals around the country. The current incident further underscores the importance of transparent and timelier disclosures of brokers and dealers for investors in the municipal bonds and other securities market.

JPMorgan’s third quarter earnings came in at 82 cents per share, substantially ahead of the Zacks Consensus Estimate of 49 cents. This compares favorably with 9 cents in the prior-year quarter.??Better-than-expected results were primarily aided by continued strong performance by the Investment Bank group. All the other segments except Consumer Lending and Card Services also delivered solid results during the quarter. However, a continuation of high levels of credit costs in Consumer Lending and Card Services loan portfolios and an increased provision for credit losses were the primary factors that negatively impacted the results.

We anticipate continued synergies from the company’s diversification and strong capital position, but increasing provisions and worsening credit quality will be a drag on upcoming results. Therefore, we are maintaining our Neutral recommendation on the shares of JPMorgan.

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(JPM) JPMorgan Chase & Company Settles SEC Charges

Company Description

Steve Madden manufactures footwear and accessories for men, women and children that are sold through 88 company-owned retail stores, department stores, specialty retailers and at the company’s web site, www.stevemadden.com.

It is also the licensee for footwear for Elizabeth and James and l.e.i. which is sold at Wal-Mart, footwear, handbags and belts for Fabulosity and Olsenboye, and for handbags and belts for Betsey Johnson and Daisy Fuentes.

Steve Madden Posted Record Sales in the Third Quarter

Investors knew the news was going to be good from Steve Madden when it reported on Nov 3 because the company pre-announced its earnings and sales results on Oct 20.

As a result of the pre-announcement, analysts raised estimates on the quarter to the 97 cents the company said it was going to earn. Hence, it appears the company only “met” estimates when, in fact, it did much better.

Sales rose 9.4% to $140.1 million from $128.1 million in the year ago period. The wholesale business is what drove the quarter, with sales climbing 15% to $112 million from $97.3 million in the third quarter of 2008.

The strong divisions were Madden Girl, Steven by Steve Madden, Steve Madden Women’s and Steve Madden Men’s wholesale footwear segments. Boots were the driver of footwear sales in the quarter.

The newly acquired Madden Zone, formerly SML Brands, as well as the new Elizabeth and James brand, also boosted the quarter.

Retail was slightly weaker, falling to $28.2 million from $30.7 million in the year ago period. Same store sales also declined 7.6% compared to a 7.8% increase last year.

Gross margin, however, improved to 44.0% from 41.4% in the third quarter of 2008.

2009 Outlook

Steve Madden is bullish about the remainder of the year. It expects net sales to rise to the range of 7% to 8% over 2008. When it pre-announced on Oct 20, the company raised full year guidance to the range of $2.55 to $2.65 per share from the previous range in July of $2.05 to $2.15 per share.

Zacks Consensus Estimates Rise

Analysts are equally as optimistic about the company’s future. The fourth quarter Zacks Consensus Estimate has jumped 11% in just the last 7 days to 61 cents from 55 cents.

For 2009, analysts have raised estimates to the high end of the company’s guidance range to $2.64 from $2.61 per share.

The estimate revisions continue into 2010 with 1 out of 5 covering analysts raising estimates in the last week to $2.83 from $2.68 per share.

Value Fundamentals

Steve Madden is a Zacks #1 Rank (strong buy) stock. It is trading with a price-to-book ratio of 2.67. The company has an outstanding 5-year average return on equity (ROE) of 15%.

Zacks Investment Research
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(SHOO) Steve Madden Limited – Posted Record Sales in the Third Quarter

Bottler case sales volume increased 4% during the quarter year over year with carbonated soft drinks growing 5% and non-carbonated beverage sales up marginally. On a geographic basis, volume sales increased 4% in North America and 9% in Latin America.

Net sales of Beverage Concentrates increased 14% during the quarter due to extensive distribution of Crush-brand. Segment operating profit increased 25% year over year. In the Packaged Beverages segment, net sales decreased 1% with a 1% dip in sales volume. However, segment operating profit increased 42% due to lower packaging and transportation costs and continued operating efficiencies.

During the quarter, Dr Pepper reported a 9% increase in sales volume growth in Latin America Beverages. Segment operating profit, however, remained flat during the quarter largely due to higher selling and distribution costs. The company decreased its corporate and other items expenses to $65 million during the quarter compared to $69 million in the year-ago quarter.

Year-till-date, Dr Pepper generated $701 million of cash from operating activities with a capital expenditure of $218 million. During the first nine months of 2009, the company also repaid $480 million of debt, and had no significant debt maturities before 2011.

For the full year, the company expects reported earnings in the range of $2.12 – $2.16 per share with a 3% – 4% decline in net sales. Excluding non-recurring items, earnings for the year are expected in the range of $1.92 – $1.96 per share.

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(DPS) Dr Pepper Snapple Group Reports Strong Earnings

Revenue for the quarter was $16.3 million, consisting of partial recognition of the non-refundable upfront payment of $225 million received from Pfizer (PFE) in October 2008. The upfront payment is being recognized on a straight-line basis through the first quarter of 2012. Revenues were nil in the year-ago period.

Operating expenses grew from $20.6 million in the year-ago period to $27.6 million in the quarter. Research and development expenses increased to $21.5 million as a result of greater clinical trials expenses which were partially offset by a cost share reimbursement under the company’s agreement with Pfizer. With Dimebon and MDV3100 moving into advanced stages of clinical development, we expect research and development expenses to increase in 2009 and beyond.

SG&A expenses increased to $6 million primarily as a result of increased payroll and other miscellaneous expenses. For 2009, the company expects total operating expenses, net of cost-sharing payments from Pfizer and Astellas, in the range of $115 and $120 million, down from the earlier guidance of $117 and $127 million.

In early November, Medivation entered into a deal with Japanese company, Astellas Pharma, for the development and commercialization of pipeline candidate, MDV3100, for the treatment of prostate cancer. While we were expecting the company to announce a partnership deal for MDV3100, we were pleased with the favorable terms of the deal.

In addition to receiving an upfront payment of $110 million, Medivation stands to receive up to $335 million on the achievement of development and regulatory milestones, plus an additional $320 million in commercial milestone payments. Moreover, Medivation is entitled to receive tiered double-digit royalties on ex-U.S. sales. While all U.S. development and commercialization costs and profits will be shared equally, Astellas be responsible for the ex-U.S. development and commercialization of the candidate.

We view this agreement as a major positive for Medivation. Not only has it brought in cash, Astellas’ strong presence in the urology market should be a major boon once MDV3100 is launched. The Astellas agreement is the second major agreement signed by Medivation in a one-year time span. Last year, Medivation entered into a collaboration agreement with Pfizer for the development and commercialization of Dimebon for the treatment of Alzheimer’s and Huntington’s diseases.

These deals have significantly boosted the company’s cash position. As of Sep 30, 2009, Medivation had $214.5 million in cash and equivalents, excluding the $110 million upfront payment received by the company in November from Astellas.

With the MDV3100 deal in place, we expect investor focus to remain on trial results on Dimebon and MDV3100. We currently have a Neutral recommendation on the stock.

Zacks Investment Research
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(MDVN) Medivation’s Earnings Report Lags Expectations

Ranchview develops products that use cellular networks instead of the traditional radio systems that are typically used to deliver RTK (Real Time Kinematic) corrections to GPS enabled equipment. RTK corrections improve the accuracy of GPS equipment.

This acquisition is in-line with Raven’s plans of increasing its market share in precision agriculture. The company sees increased acceptance of precision agricultural equipment as an essential tool for maximizing yields. Agricultural market fundamentals remain strong and we believe the Applied Technology division will continue to be a primary growth driver for Raven in the long-term.

Raven is aggressively pursuing opportunities to expand its position in niche markets and take market share from its weaker competitors. The company’s strategy in this difficult economy is to develop new products and increase its market share. At the same time, the company said that it will price its products at a value based premium and will not resort to price cutting to gain market share.

We believe Raven is in a good position to invest in growth opportunities. The company has a solid balance sheet with no long-term debt and cash and cash equivalents of $43 million (as on July 31, 2009). Also, Raven generated operating cash flow of $34.3 million during the first half of fiscal 2010, up 49.9% from the prior year period.

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(RAVN) Raven Industries Acts on its Growth Plans

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

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

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

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

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

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

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

Zacks Investment Research
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(GG) Leading Producer Goldcorp’s Profits Double

Retail segment: Retail segment revenues plunged 25% to $1.2 billion in the quarter on a 41% decline in crop nutrient sales to $345 million due to a significant decline in crop nutrient prices. Crop nutrient volumes in the quarter remained flat. Gross profit from the crop nutrients business almost halved to $31 million. Crop protection sales were $768 million in the quarter, down 12% from the same period last year. The decline was driven by lower volumes for fungicides and lower pricing for glyphosate products.

Gross profit in the quarter was $169 million, down 12% from the previous year. Profit from the nutrient business was down significantly due to lower sales volumes from Legacy Agrium Retail and significantly lower margins resulting from the carry-over of high priced crop nutrient inventories, which were sold at lower prices. Sales for seed and services decreased 14% to $114 million.

Wholesale segment: Wholesale’s net sales were down 59% to $658 million in the quarter, driven by lower sales prices and volumes for nitrogen and phosphate products combined with significantly lower potash sales volumes. Nitrogen sales were down 48% to $260 million while potash sales declined 56% to $109 million. Phosphate sales were down 64% to $114 million.

Following lower sales, nitrogen profits shrank 61% to $80 million while potash profits declined 81% to $47 million. Phosphate profits of $1 million were negligible compared with $195 million in the year-ago quarter.

Both international and domestic demand were significantly lower than usual due to a combination of delayed contract settlements in China and India, credit issues in many other international markets and the current cautious approach to replenishing stocks of retailers and distributors in North America and globally.

Advanced Technologies segment: Sales in the Advanced Technologies segment were down 33% to $60 million year over year, driven by lower volumes and margins in turf and ornamental business due to lower household expenditures as a result of the slower economic growth. Cash provided by operating activities was $229 million in the quarter compared to $300 million in the prior year.

Compared to the end of the third quarter of 2008, net debt to net debt plus equity dropped 10% to 26% at the end of the quarter. Agrium sees a significant recovery in demand across all crop inputs starting early 2010, particularly for the retail and potash businesses. Corn prices are recovering and the growth for food products is set to remain strong.

Through all three operational business units – Retail, Wholesale, and Advanced Technologies – Agrium is well positioned to benefit from a recovery in the agriculture and crop input market. Agrium expects earnings per share of 14 cents to 44 cents in the fourth quarter of 2009. Meanwhile, Agrium repeated its commitment to acquire Deerfield, Illinois-based CF Industries (CF) and its willingness to increase its offer of $40 in cash plus one U.S. dollar-denominated Agrium share.

CF has steadfastly rejected Agrium’s takeover offer. Despite two upward revisions in the offer price, CF had turned down Agrium primarily on the grounds of substantial undervaluation. CF Industries has meanwhile made a hostile takeover bid for rival Terra Industries. Terra, which produces and markets nitrogen products, has repeatedly rebuffed CF’s proposal.

However, CF remains committed to acquire Terra. Agrium also remains committed and has extended the deadline several times. The company has stated that its cash reserves are sufficient and has committed financing to complete the deal. Should the acquisition go through, Agrium would become the world’s fourth-largest fertilizer producer.

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(AGU) Agrium’s Year-Over-Year earnings Declined a Significant 87% on Lower Volumes and Prices

Despite an 11.9% year-over-year decrease in top line, results for the quarter benefited from solid expense management, which helped reduce expenses by 18.7%. An almost stable pricing environment was also observed during the quarter.

Total revenues for the quarter were $67.2 million, compared to $76.3 million in the prior-year quarter. During the quarter, the top line was down due primarily to decrease in audit adjustments and an 18.4% decline in net premiums earned that resulted from the soft insurance market condition as a whole. Both the voluntary premiums written and audit premiums for policies written decreased during the quarter.

Net income for the quarter increased 12.8% year over year to $15.1 million. Pre-tax income for the reported quarter included a $6.7 million favorable prior year loss development and $2.0 million of realized gains from sales of certain equity securities and one previously impaired fixed maturity security. Pre-tax income for the prior-year quarter included a $6.6 million favorable prior year loss development, realized losses of $2.9 million from the sale of equity securities and other-than-temporary impairments, and income of $703,000 from a reinsurance commutation.

Net investment income – which represented 10.2% of total revenues – was $6.9 million for the third quarter of 2009, down 10.8% from $7.7 million in the prior-year quarter.

Net loss and loss adjustment expense (LAE) increased 20.5% year over year to $33.4 million (or 57.4% of net premiums earned) from $42 million (or 58.9% of net premiums earned) in the prior-year quarter.

Combined ratio during the quarter increased slightly to 79.3% from 79.4% in the prior-year quarter. Return on average equity (ROE) for the quarter was 19.30%, compared to 20.50% in the prior-year quarter.

Outlook

Amerisafe aims to produce an ROE of at least 15% over the long-term while maintaining optimal operating leverage in its insurance subsidiaries.

Though the company is expected to face an uncertain environment for the next few quarters as the recession continues to hurt payrolls, the pricing environment is now improving somewhat. Furthermore, the claim frequency has continued to fall and the company has continued its excellence expense management. Also, the premium retention increased significantly and the company continued to gain market share.

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(AMSF) Amerisafe Beats on Lower Costs

Though the company’s results were hurt by lower commodity prices, Statoil continues to maintain a high activity level both in Norway and internationally. Equity and entitlement productions were up 8% and 10% year over year, respectively, with the start-up of operations on several new oil and gas fields such as Tyrihans in the Norwegian Sea, Tune Sor in the North Sea and Thunder Hawk in the Gulf of Mexico.

Total oil and gas entitlement production during the quarter averaged 1.71 million barrels of oil equivalent per day (MMBOE/d), 62% of which was oil and 38% natural gas, compared to 1.55 MMBOE/d in the year-earlier period. Total oil and gas liftings in the quarter were 1.66 MMBOE/d, compared to 1.50 MMBOE/d in the year-earlier period. During the quarter, the company’s realized oil prices averaged NOK 400 ($65.5) per barrel, down approximately 39% year over year, while realized natural gas prices averaged NOK 1.61 (26 cents) per standard cubic meter, down approximately 32% from the year-ago level.

Net adjusted operating income during the quarter was NOK 31.2 billion ($5.1 billion), down by 41% from the year-earlier quarter. The decrease was primarily caused by the reduction in prices for both liquids and gas, partly compensated by increased sales volumes of liquids and gas.

During the quarter, total capital investment was NOK 25 billion ($4.1 billion) and operating cash flows were NOK 22.5 billion ($3.7 billion). Net debt-to-capitalization ratio stood at 27.1%.

Statoil expects its 2009 equity production to be 1.95 MMBOE/d. Capital expenditures for 2009 are expected to be around US$13.5 billion. Excluding purchases of fuel and gas for injection, unit production cost for equity volumes in 2009 to 2012 is expected to be in the range of NOK 33 to 36 per barrel. The company expects to complete around 70 exploration and appraisal wells in 2009.

Statoil is gaining momentum with the start-up of operations on several new oil and gas fields. A sharp rise in production is offsetting the fall in oil and gas prices, which helps the company to experience smaller profit declines than other large European oil companies such as Royal Dutch Shell (RDSA) and BP plc (BP).

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(STO) Statoil ASA Slips, but Volumes up

Total revenues for the quarter came in at $39.5 million, compared with $28.1 million in the third quarter of 2008, up 40.6%. Product revenues from the Oncotype DX breast cancer test increased 39% to $38.9 million, compared with $28.1 million in the comparable quarter of 2008. Contract revenues accounted for the balance. In the third quarter, Genomic Health delivered in excess of 12,600 test results, compared with more than 10,220 test results in the comparable period of 2008, representing approximately a 23% year-over-year growth.

Research and development spend for the third quarter increased 31.9% to $9.1 million, compared to $6.9 million in the same period in 2008, due to increased spending related to the Oncotype DX colon cancer test, and other pipeline efforts.

Selling and marketing and general and administrative expenses increased 31% to $22.6 million from $17.3 million in the year ago period due to the expansion of the US sales force earlier in the year coupled with the growing international presence.

The company exited the quarter with cash, cash equivalents and short-term investments of $58.9 million as against $55.7 million at the end of the immediately preceding quarter and $56.7 million at the end of 2008.

Genomic Health reaffirmed its previous forecast of ending 2009 with revenues in the range of $148 million- $160 million.

Even though sales of Oncotype remain robust and the company remains optimistic about its prospects, we are highly concerned about the company’s reliance on the product for growth. We believe that Genomic needs to expand its product portfolio further in order to sustain growth. Furthermore we are also concerned about the company’s weak pipeline. Due to these concerns, we have an Underperform rating on the stock.

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(GHDX) Genomic Health Third Quarter Loss Narrows

Sales

Total sales in the reported quarter declined 22% year over year to $87.2 million. The decline was due to lower customer demand across all the business segments as a result of the economic turbulence. Patients are deferring elective procedures as they are not life sustaining in nature.

Instruments revenues declined 15% year over year to $41.3 million. Implants revenues declined 23% year over year to $24.2 million. Both Cases and Other sales registered a decline of 29% and 40%, respectively.

Margins

Symmetry registered an expansion in margins due to its strong cost-cutting initiatives. Operational improvements at the Sheffield, UK unit also helped in improving margins. Gross margin in the reported quarter increased 150 basis points (bps) year over year to 24.4%.

Selling, general and administrative (SG&A) expenses as a percentage of sales declined 110 bps year over year to 12.4%. Strong gross margin coupled with lower SG&A expenses as a percentage of sales helped in improving the operating and net margins. Operating margin improved 260 bps year over year to 12.0%. Net margin improved 390 bps year over year to 6.2%.

Balance Sheet

Symmetry ended the quarter with cash and cash equivalents of $16.4 million, an increase of 61% year over year. The company’s outstanding debt stood at approximately $101.2 million at the end of the quarter.

Guidance

Symmetry lowered revenues and earnings per share guidance for the full fiscal 2009. It expects revenues in the range of $355 to $365 million, lower than the prior guidance of $385 to $405 million. Earnings per share is projected between 63 and 68 cents, compared to the prior guidance of 77 to 85 cents.

Symmetry Medical is the largest original equipment manufacturer (OEM) provider of orthopedic implants and instruments to orthopedic device manufacturers. The company has created a distinct competitive position in the orthopedic device market with its Total Solutions approach. Under the approach, customers are provided with a broad range of products relating to orthopedic implants as well as comprehensive services and production capabilities to bring these implant systems from the drawing board design stage to commercialization in a timely and cost efficient manner.

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(SMA) Symmetry Medical Disappoints, Lowers Outlook

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

Quarterly consolidated net income was $174.8 million, up 3.8% year-over-year. Third-quarter EPGDS (Earnings per Global Depository Shares) was 31 cents, exceeding the Zacks Consensus Estimate of 29 cents. This was primarily due to effective control of operating expenses, as well as a significant reduction of integral cost of financing.

Quarterly operating segment income (excluding corporate expenses and depreciation & amortization) was $395 million, up 1.5% year-over-year. Third-quarter consolidated operating income was $294.7 million, up 0.5% over the prior-year quarter. Integral cost of financing in the reported quarter was $38.1 million, down almost 12% year-over-year. During the same quarter, the company repurchased 1.4 million CPOs (1 CPO= 117 common outstanding shares) for total consideration of a little over $5 million.

At the end of the third quarter 2009, Grupo Televisa had approximately $2.9 billion cash and marketable securities and $2.66 billion outstanding debt on its balance sheet, compared to $4.35 billion of cash and marketable securities and $3.2 billion outstanding debt at the end of the prior-year quarter. Capital expenditure, during the reported quarter was $149.2 million.

Television Broadcasting Segment

Quarterly revenue of $399.63 million was down 1.9% year-over-year. Operating profit was $198.9 million, down 3.8% year-over-year. Quarterly operating margin was 49.3% compared to 50.3% in the year-ago quarter.

Pay Television Networks Segment

Quarterly revenue of $50.74 million was up 28.6% year-over-year. Operating profit was $29.36 million, up 18.7% year-over-year. However, quarterly operating margin was 57.9%, compared to 62.7% in the year-ago quarter.

Programming Exports Segment

Quarterly revenue of $55.75 million was up 36.9% year-over-year. Operating profit was $31.2 million, up 77.6% year-over-year. Quarterly operating margin was 56%, compared to 43.2% in the year-ago quarter.

Publishing Segment

Quarterly revenue of $58.64 million was down 11.8% year-over-year. Operating profit was $2.6 million, down 78.1% year-over-year. Quarterly operating margin was just 4.4%, compared to 17.8% in the year-ago quarter.

Sky Segment

Quarterly revenue of $184.95 million was up 9.2% year-over-year. However, operating profit was $79.8 million, down 3.4% year-over-year. Quarterly operating margin was 43.1%, compared to 48.8% in the year-ago quarter.

Cable and Telecom Segment

Quarterly revenue of $161.56 million was up 10.6% year-over-year. Operating profit was $55.47 million, up 11.5% year-over-year. Quarterly operating margin was 34.3%, compared to 34.1% in the year-ago quarter.

Other Businesses Segment

Quarterly revenue of $78.6 million was up 14.6% year-over-year. Operating loss was $2.28 million, up 44.2% year-over-year. However, quarterly operating margin was negative (2.9%), compared to negative (6%) in the year-ago quarter.

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(TV) Grupo Televisa Reports Mixed Results

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

On the revenue front, the company witnessed a slide by more than half, to $673 million from $1.76 billion year-over-year. Dynegy’s diversified power generation business clocked adjusted earnings of $431 million from $307 million in the year-ago quarter. Operating income from the power generation segments was $40 million, compared to $1.1 billion in the year-ago quarter. Operating income included a $382 million in impairment charges from accounting classification of the eight power generation facilities as held for sale, that are to be sold to LS Power. Operating income also included mark-to-market losses of $128 million, compared to mark-to-market gains of $889 million in the year-ago period on account of lower forward market power prices.

In the reported quarter, Midwest segment’s adjusted earnings benefited from the sale and assignment of a multi-year power sales contract and higher realized energy prices that were contracted prior to the market downturn. Midwest production volumes decreased 7% year-over-year. This was primarily due to a 12% reduction in coal facility volumes on account of lower demand attributed to mild summer weather and increased off-peak wind generation. This decline was partially offset by a 15% increase in volumes related to the company’s natural gas facilities.

West segment’s adjusted earnings benefited from increased tolling and capacity revenues. Production volumes decreased 5% due to weak spark spreads attributed to lower demand and mild weather.

Northeast segment’s adjusted earnings benefited from a 20% expansion in production volumes attributed to natural gas combined-cycle facilities, which benefited from coal-to-gas switching in the region and reduced transmission congestion. This was partially offset by reduced run-times for coal-and oil-fired units due to compressed spark spreads.

Dynegy’s cash from operations for generation was $690 million at the end of the reported quarter, compared to $764 million in the year-ago period. The company incurred maintenance and environmental capital expenditures to the tune of $103 million and $241 million, respectively in the first nine months of this year. Adjusted free cash flow from power generation business was $346 million for the nine months ended September 30, 2009, compared to $510 million in the year-ago period.

Dynegy expects to record a GAAP loss of $1.1 billion to $1.2 billion in fiscal 2009. However, in fiscal 2009 the company expects to earn adjusted earnings in the range of $730 million to $760 million. The trend is expected to continue in fiscal 2010 where the company expects to record a GAAP loss of $175 million to $250 million. However, the company expects to earn adjusted earnings in the range of $425 million to $550 million.

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(DYN) Dynegy’s Earnings Report Sunk on Accounting Charges

Sales volumes for the quarter came in at 476 MMcfe/d (77% natural gas), down 9% from 520 MMcfe/d in the corresponding 2008 period. The decrease in production was due to deferred and divested volumes.

During the quarter, production expenses decreased approximately 24% year-over-year to $1.17 per Mcfe, mainly on the back of a fall in production. Unit general and administrative expenses for the quarter was essentially flat year-over-year to 28 cents per Mcfe, while depreciation and depletion expenses for the quarter decreased 48% year-over-year to $1.49 per Mcfe due mainly to a non-cash ceiling test write-down of oil and gas properties.

Forest invested $76.9 million during the quarter in exploration and development activities. At the end of the quarter, the company had $5.1 million in cash and net long-term debt of approximately $2.48 billion (debt-to-capitalization ratio of 71.1%).

The company revised downward its net sales volume guidance to reflect the effects of asset sales and pipeline shut-ins. Total net sales volume for 2009 will be affected by 3 Bcfe of net sales. As a result of ongoing cost cutting initiatives, the company also reduced its previous production expense guidance by 8% and G&A expense by 17%.

Despite the improving commodity-price environment, we remain concerned about the company’s debt-heavy balance sheet as well as its weak production and reserve growth profile. Forest recently revised downward towards its net sales volume for 2009, citing assets sales and pipeline/infrastructure shut-ins. As such, we see limited upside from current levels and prefer other better positioned names in this space.

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(FST) Forest Oil Corporation Misses Estimates on Lower Sales

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

Crude oil and condensate production during the quarter was 59.5 thousand barrels per day (MBbl/d), up nearly 23% from the year-ago level. This was primarily driven by a 24% growth in domestic volumes, reflecting increased production in North Dakota. Natural gas liquids (NGL) volumes increased almost 69% from the year-ago quarter to 24.1 MBbl/d.

Average realized natural gas prices decreased roughly 63% year-over-year to $3.01 per Mcf. Prices decreased across all the geographical segments, with domestic realizations down nearly 64% year-over-year to $3.27 per Mcf. Average realized prices for crude oil and condensates decreased approximately 45% year-over-year to $60.65 per barrel.

Prices decreased across all the geographical segments, with domestic realizations down nearly 45% year-over-year to $60.79 per barrel. Quarterly NGL prices were $31.14 per barrel, down approximately 55% year-over-year.

At the end of the quarter, EOG had cash and cash equivalents of $608.5 million and long-term debt of $2.8 billion, representing a net debt-to-capitalization ratio of approximately 22.7%. During the quarter, EOG generated approximately $819.3 million ($3.24 per share) in discretionary cash flow (DCF), compared to a DCF of $1.17 billion ($4.66 per share) in the year-ago quarter.

The company has set a full-year target of $3.1 billion (excluding acquisitions) for exploration and development activities. Additionally, the company has allocated $300 million for natural gas gathering, processing and other expenditures.

With the performance of its North American plays, EOG has increased its 2009 total production growth target from 5.5% to 6%. Total liquids growth target was also increased from 25% to 27%. For 2010, the company has set a total organic production growth target of 13% that includes total liquids production growth of 50%.

EOG has an industry leading organic production-growth profile, strong inventory of drilling opportunities, attractive cost and return metrics and impressive long-term growth prospects. We see EOG as a core holding in the large-cap E&P space. However, its natural gas weighted assets currently is a concern. We recommend a Neutral rating for the stock.

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(EOG) EOG Resources Maintains Analyst’s Rating at Neutral

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

In the reported quarter, OG&E registered earnings of $1.26 per share, compared to $1.15 per share in the year-ago quarter. Enogex recorded earnings of 18 cents per share, compared to 30 cents per share in the year-ago quarter. The holding company, including results from the OGE Energy Resources marketing business, posted a loss of 4 cents per share, compared to earnings of 5 cents per share in the year-ago period.

Revenue fell to $845.3 million in the reported quarter from $1.3 billion in the year-ago quarter due to a tepid economy and a cooler summer affecting demand for electricity. Electric Utility revenues fell to $577.9 million from $682.5 million in the year-ago quarter. Similarly, Natural Gas Pipeline revenues fell to $267.4 million from $571.8 million last year.

OGE Energy Resources reported consolidated gross margin on revenues of $431 million in the reported quarter, compared to $418 million in the year ago quarter. Operating income was $230 million, compared to $231 million in the year ago period.

OG&E reported gross margin on revenues of $342 million, compared to $302 million in the third quarter of 2008. The increase was primarily due to retail rate increases in 2009, partially offset by milder weather. Also affecting OG&E’s quarterly results were higher expenses primarily due to increased depreciation expense associated with higher levels of plant in service and higher operation and maintenance expenses, mainly as a result of increased payroll and benefits costs. Net income at OG&E was $123 million in the quarter, compared to $107 million year-over-year.

Enogex reported gross margin on revenues of $93 million in the quarter, compared to $108 million in the comparable quarter last year. The decrease was due primarily to lower commodity prices, partially offset by continued volume growth. Net income at Enogex was $18 million in the third quarter this year, compared with $28 million in the third quarter of 2008.

OGE Energy reaffirmed its full-year consolidated EPS guidance between $2.30 and $2.60. For fiscal 2010, the company expects EPS to be in the range of $2.70 to $2.95.

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(OGE) OGE Energy Corporation Tops Expectations

Results for the first nine months of 2009, although below year-ago level were better than the Zacks Consensus Estimate, reflecting an improvement in credit markets and growth in Moody’s Analytics business.

We believe that Moody’s remains a solid franchise in rating debt instruments and will show substantial growth with its diversified credit research business model and international growth.

The company raised its outlook for fiscal 2009, for the second time this year, due to continuing strength in corporate debt issuance. Earnings per share, is expected to range between $1.60 and $1.68, up from its previous outlook of $1.45 to $1.55. Revenues for the full year are expected to be flat year-over-year, versus the previous expectation of a decline in the mid-single-digit percentage range. Recurring revenue is expected to be stable. Moreover, the company expects bond activity to remain strong, going forward.

Although, over the longer-term, Moody’s remains a solid franchise and will show substantial growth, we maintain a cautious approach as margins may be under pressure due to incremental costs related to regulatory issues in 2010. The company expects to incur incremental expenses of approximately $15 million to $25 million in 2010 related to regulatory issues.

Despite signs of revival in economic conditions, a recovery in debt markets is expected to be slow as they face a tempered credit environment. Moreover, we don’t expect a major improvement in Moody’s Structured Finance business.

Over the last five years, Moody’s shares have traded in a range of 9.9X to 36.3X trailing 12-month earnings. We reiterate our Neutral recommendation on the stock with a target price of $25.00, based on a P/E multiple of 13.8X 2010 earnings, a discount to the peer group.

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(MCO) Analysts Raising Moody’s Earnings Estimates

Quarterly operating income was $122.7 million, up 4.8% year-over-year. This was mainly attributable to a 4.5% year-over-year decline in cost of sales and expenses. In the reported quarter, total segment profit (before depreciation and amortization) was $144.3 million, up 7.9% year-over-year. During the same quarter, the company generated $157.2 million of cash from continuing operations, compared to $216.3 million in the year-ago quarter. Quarterly free cash flow was $130.1 million, compared to $179.2 million in the prior-year quarter. At the end of the third quarter 2009, Scripps had more than $217.2 million of cash and marketable securities and no outstanding debt on its balance sheet.

Lifestyle Media Segment

Quarterly total revenue of $325.5 million was an improvement of 4.3% year-over-year. Out of this: advertising revenue was $236.6 million, up 0.5% year-over-year; revenue affiliates fee was $81.1 million, up 16% year-over-year; and other revenue was $7.9 million, up 19.1% year-over-year. Quarterly total expense was $175.1 million, up 1.2% year-over-year. Out of this, programming expense was $79.8%, up 7% year-over-year and non-programming expense was $95.3 million, down 3.3% year-over-year. However, total segment profit was $150.5 million, up 8.3% year-over-year.

Brand wise, HGTV revenue was $152.5 million, up 6.4% year-over-year. Total subscriber base is now 98,800 (up 1.4% year-over-year). Food Network revenue was $118.6 million, up 5.1% year-over-year. Total subscriber base is now 99,300 (up 1.8% year-over-year). DIY Network revenue was $17.7 million, up 10.5% year-over-year. Total subscriber base is now 52,100 (up 7.9% year-over-year). Fine Living Network (FLN) revenue was $11.2 million, down 13.1% year-over-year. Total subscriber base is now 55,700 (up 7.5% year-over-year). Great American Country (GAC) revenue was $6.4 million, up 9.5% year-over-year. Total subscriber base is now 57,200 (up 5.9% year-over-year). SN Digital revenue was $17.5 million, down 8.4% year-over-year.

Interactive Services

Quarterly total revenue of $39 million was down 25.2% year-over-year. Operating expenses were $32.6 million, down 20% year-over-year. However, segment profit was $6.4 million, down 44.4% year-over-year.

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(SNI) Scripps Networks Interactive Beats In Q3

Total revenues in the reported quarter were roughly flat year over year at $20 million. In terms of products: Worldwide Impella revenues increased 26% year over year to $13.2 million. Non-Impella revenues declined 28% year over year to $6.8 million.

Abiomed witnessed a strong demand for its Impella products in the domestic market. Total Impella revenues in the U.S. increased 95% year over year to $12.1 million. This was backed by strong commercial reorders in the U.S. market which increased 230% year over year to $6.6 million.

In terms of operational metrics: the number of patients in the U.S. treated with Impella 2.5, 5.0 or LD increased 238% year over year to 338. However, the number of hospitals added to the company’s client-base in the reported quarter declined 54% year over year to 50.

Gross margin in the reported quarter declined 300 basis points (bps) year over year to 73.0%. Research and development expenses as a percentage of sales declined 40 bps year over year to 33.9%. Selling, general and administrative expenses as a percentage of sales increased 450 bps year over year to 74.0%. Operating loss margin increased 710 bps year over year to a negative 36.9%.

Abiomed ended the quarter with cash, cash equivalents and marketable securities (short + long term) of $52.3 million, a decline of $2.2 million sequentially. The company has no outstanding debt at the end of the quarter.

The company reaffirmed its previous full fiscal 2010 revenue guidance of $86 to $91 million.

Abiomed is engaged in developing, manufacturing and marketing of medical products designed to assist or replace the pumping function of the failing heart. The company’s strategy focuses on heart recovery as the goal for all acute cardiac attacks. Abiomed’s products are designed to enable the heart to rest, heal and recover.

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(ABMD) Abiomed, Inc’s Loss Narrower than Expected

Revenues

Revenues of $226.7 million was up 17.5% sequentially and down 16% year over year. Revenues came in over the high-end of management’s guidance range of 206-214 million.

The microcontroller segment did extremely well in the last quarter, with all the three categories (8-bit, 16-bit and 32-bit) growing very strongly on a sequential basis. Flash microcontrollers made up the bulk of the shipments in the last quarter. Associated application development systems also did extremely well, with 38,806 units sold, a record for the company. The segment generated over 81% of revenues in the last quarter.

The memory business (mainly serial EEPROMs that support the microcontroller business) was up double-digits on a sequential basis. The segment generated 9% of revenues.

The analog business also grew very strongly, driven by strength in linear, mixed signal, interface, and safety and security product lines. Segment contribution reached 10% in the last quarter.

Over 51% of second quarter revenue came from Asia, a sequential increase of 23.8%. The Americas generated 25% (up 13%), while Europe accounted for the remaining 24%, up 10% from the June 2009 quarter. The year-over-year weakness was mainly due to recession-related weakness, as a result of which growth came off a smaller base.

Operating Performance

The company generated a gross margin of 27.8% in the last quarter, which was a sequential increase of 413 bps, but a year-over-year decline of 613 bps. Higher volumes helped drive utilization rates, which along with cost efficiencies, resulted in the sequential increase in gross margin.

The operating expenses of $62.7 million were higher than the previous quarter’s $56.4 million. The operating margin was 27.8%, up 570 bps sequentially and down 765 bps year over year. The sequential improvement in the operating margin was primarily attributable to lower COGS (as a percentage of sales), although lower R&D and SG&A also contributed. COGS as a percentage of sales was down 413 bps, R&D was down 110 bps while SG&A was down 47 bps. The year-over-year decline was mainly due to lower volumes.

On a pro forma basis, MCHP generated a net income of $52.2 million, or a 23% net income margin, compared to a $29.8 million, or 15.5% in the previous quarter and $82.7 million, or 30.7% net income margin in the same quarter last year.

Pro forma earnings per share was 28 cents, compared to 16 cents in the June quarter and 44 cents in the prior-year quarter. Our pro forma estimate excludes acquisition-related costs, deferred stock compensation, amortization of intangibles and gain on sale of investments in the last quarter. Our pro forma calculations may differ from management’s presentation due to the inclusion/exclusion of some items that were not considered by management.

On a GAAP basis, the company recorded a net income of $44.5 million (24 cents per share), compared to $27.4 million (15 cents per share) in the previous quarter and $75.7 million (40 cents per share) in the prior-year quarter.

Balance Sheet

Inventories were down 4.8% to $108.5 million, yielding inventory turns of 3.7X. Days sales outstanding (DSOs) were around 43 days. The company ended with cash and investments balance of $1.36 billion, down $43.4 million during the quarter. In the second quarter, the company generated $96.6 million cash from operations and paid $62.1 million in dividends. Microchip had $337.4 million in long term debt, amounting to a net cash balance of $1.03 billion. Including long term liabilities, the debt-cap ratio was 35.1%.

Guidance

In the third quarter, management expects revenues of $236-245 million (up 4-8% sequentially).

The GAAP gross margin is expected to be 56.2% to 56.7%, operating expenses 30.1% to 30.3%, other income/expense of -$2.7 million to -$2.9 million, a tax rate of 12.1% to 12.5% and a diluted share count of 187.5 million to 188.3 million. This is expected to result in a GAAP EPS of 27-29 cents.

The non-GAAP gross margin is expected to be 57.0% to 57.5%, operating expenses 26.8% to 27.0%, other income/expense of -$1.1 million to -$1.3 million, a tax rate of 12.8% to 13.2% and a diluted share count of 185.8 million to 186.6 million. This is expected to result in a non-GAAP EPS of 33-35 cents.

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(MCHP) Microchip Technology Inc Beats in Quarterly Report

The year-over-year decrease in FFO was due to the loss on extinguishment of debts and impairment charges totaling 25 cents per share. Excluding one-time charges, FFO for the quarter was 77 cents per share compared to 86 cents in the year-ago period.

During the quarter, Health Care completed $156.3 million of gross new investments in large senior housing properties and state-of-the-art medical facilities. The company also strengthened its liquidity by raising $434.6 million of net equity proceeds. Year-till-date, Health Care received $177.4 million in proceeds from asset sale and loan-pay-offs, realizing net profit of $26.9 million.

During the quarter, the company prepaid $58.8 million of secured debt and repurchased $161.4 million of unsecured notes scheduled to mature in 2012. In addition, Health Care received $132.5 million of mortgage loans from Freddie Mac (FRE). At quarter end, Health Care had cash and cash equivalents of $102.4 million.

Health Care declared a cash dividend of 68 cents per share during the quarter, which marks the 154th consecutive quarterly dividend payment. For full year 2009, the company has revised its normalized FFO guidance to $3.10 ? $3.12 per share from its earlier projections of $3.07 ? $3.14 per share.

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(HCN) Health Care REIT Inc’s Funds From Operations Plummets

On a year-over-year basis, the company’s adjusted earnings per share declined 68.0% (from 50 cents to 16 cents), while revenue was down 44.6% to $227.2 million. The year-over-year negative comparisons were due to the steep decline in commodity prices.

Production

Production during the quarter averaged 42.7 thousand oil-equivalent barrels per day (MBOE/d), a decrease of approximately 7.1% year over year. However, after adjusting for the 2009 sale of 60% of the company’s Barnett Shale natural gas assets, Denbury’s volumes rose approximately 10% from the third quarter of 2008.

Of the total quarterly production, approximately 82% was oil. The year-over-year production increase can be attributed to the contribution from the recently acquired Hastings Field and a 23% tertiary oil production increase. Tertiary production for the quarter averaged 24.3 thousand barrels per day (MBbl/d). The Heidelberg, Tinsley, Soso, Lockhart Crossing and Cranfield fields were the main contributors for the tertiary production increase.

Realizations

Denbury’s realized oil prices (including the impact of hedges) averaged $70.54 per barrel, down 35.1% year over year. Realized natural gas prices for the quarter was $3.09 per Mcf, a decrease of 62.4% from the previous year quarter.

Expenses

Lease operating expenses on a per BOE basis increased 5.1% year over year to $21.22, primarily on account of the Barnett Shale property sale in mid-2009. G&A expenses per BOE were up significantly (by 72.4%) from the year-earlier period to $6.12, mainly due to higher employee costs. DD&A expenses on a per BOE basis declined slightly year-over-year to $11.66.

Capital Budget & Guidance

Denbury reiterated its 2009 capital budget at $750 million, of which approximately 90% will go to the company’s tertiary operations. As previously announced, due to the Barnett Shale assets divestment, the company decreased its 2009 production guidance to 47.5 MBOE/d. Denbury reaffirmed this guidance. Further, as declared earlier, the company reduced its 2009 tertiary production guidance by 1% to 24.2 MBbl/d (from 24.5 MBbl/d before).

Outlook

Our Neutral recommendation for Denbury shares reflects the company’s low-risk profile and oil-centric niche business model. With oil representing about three quarters of the total production, the company is experiencing an enviable position in the industry, given the higher realizations and margins that presently exist in oil than gas.

Earlier this week, Denbury entered into a definitive agreement with U.S. onshore oil and gas producer Encore Acquisition Company (EAC) to acquire the company for $4.5 billion. We think that Encore is a good fit for Denbury as both the companies have exposure in tertiary recovery techniques to increase the value of acquired properties. As Denbury had sold its 60% interest in Barnett Shale assets in June to focus on its core tertiary oil operations, the Encore acquisition is another prudent step in this direction.

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(DNR) In-Line Quarter for Denbury Resources

Core businesses (Internet Infrastructure and Identity Services) generated revenues of $257 million, up 1% sequentially and up 6% year-over-year. Revenues from discontinued operations came in at $41 million.

Operating margin came in at 38.6%, marginally up from the previous quarter. Net income came in at $64 million. Earnings per share (EPS) came in at 33 cents easily beating the Zacks Consensus Estimate of 28 cents.

During the quarter, the company generated $105 million of cash from operations and used $25 million in capital expenditures. The company ended the quarter with cash and equivalents of $1.4 billion, an increase of $124 million from the previous quarter. As of September 30, 2009, deferred revenue came in at $881 million.

Subsequent to the end of the quarter, VeriSign completed the sale of its Global Security Consulting business, and Messaging and Mobile Media Services. The company has so far sold thirteen of its non-core businesses (including the Jamba joint venture) for $750 million.

Management earlier indicated that it would focus on core competencies to provide highly scaleable, reliable and secure Internet infrastructure services to customers around the world. Hence, the company divested a number of non-core businesses in its portfolio, such as communications, billing and commerce, content delivery, messaging and enterprise security services.

VeriSign plans to invest proceeds from the divestitures into its core Internet Infrastructure and Identity Services. It is also using funds to buy back shares and has already repurchased stock worth $22.6 million in the first half of 2009. Through the sale of these non-core businesses as well as disciplined operating management, VeriSign has managed to reduce its headcount by nearly 1,000 employees.

Going forward, management expects revenues between $258 million and $262 million, flat or up 2% sequentially. Operating margin is estimated to come in at 38.6%.

The company has completely restructured its business in the past two years and expects that these efforts will unlock value for the company in the long-term. Cash flow is expected to be strong in 2010.

The company is sitting on a huge cash balance, and we expect management to prudently invest the funds in growth businesses.

In February 2009, VeriSign had lost an unsolicited bid to acquire Certicom Corp., which develops, manufactures and markets digital information security products, technologies and services, to Research in Motion Ltd. (RIMM).

As the Internet spreads to mobile devices, we see VeriSign tapping this growth market with an array of value-added services.

Headquartered in Mountain View, California, VeriSign provides essential Internet infrastructure services to companies, service providers and website owners. The terms of the deal were not disclosed.

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(VRSN) VeriSign’s Earnings Beats Forecasts