And unless you read corporate press releases or work in a corporate IT shop, you probably didn’t even know Cisco made such a gadget. You didn’t miss anything, though, because the Cius is now a (very small) bit of history.

Today Cisco announced on its corporate blog that it would no longer continue to develop the Cius tablet. Cisco has basically run afoul of the growing “bring your own device” trend at corporate IT shops. And when employees bring their own tablets and smartphones, well, most of the devices have the familiar logo of Apple Inc. (NASDAQ: AAPL). Apple has supported the trend by paying a lot of attention to security issues and making it easier for corporate shops to incorporate the once-troublesome devices into company wide networks.

The Cisco blog post notes that the company plans to “double-down” on its Jabber and WebEx software products.

Cisco’s shares are trading up 0.02% today at $16.42 in a 52-week range of $13.30-$21.30.

Paul Ausick

The companies announced that SAP America has entered into an agreement to acquire Ariba for its cloud-based business commerce network at a price of $45.00 per share.  This generates and enterprise value (equity and debt) of about $4.3 billion.  The Ariba board of directors has already approved the transaction unanimously and the buyout represents a 20% premium over the May 21 closing price.

Today’s acquisition will combine Ariba’s buyer-seller collaboration network with SAP’s customer base and business process expertise “to create new models for business-to-business collaboration in the cloud.”

SAP is worth almost $70 billion in market value and its $58.77 share price for ADRs compares to a 52-week range of $47.39 to $72.52. Ariba shares were up 0.8% at $37.96 before being halted and the 52-week range is $21.90 to $40.45. With Thomson Reuters having a consensus estimate of $0.99 EPS for 2012, SAP is effectively paying 45-times earnings for Ariba.

JON C. OGG

The Philadelphia Fed’s manufacturing survey showed that the pace of growth fell from a higher growth rate in recent months, while the survey’s broad indicators for general activity fell into negative territory for the first time in eight months. The reading came in at -5.8 as prices paid and received fell sharply in the report.  Bloomberg had the consensus for Philly Fed at 10.0 and the range of estimates was 5.0 to 13.0 for this report.

The Conference Board’s report on Leading Indicators for April fell by 0.1% after being up by 0.3% in March.  Bloomberg had estimates of 0.1% for the leading indicators, and the range of estimates was 0.0% to 0.3% for the report.  This last month had only five of the ten indicators in the positive, although its coincident index did manage to rise by 0.2%.  Delivery times were the worst drag and this was the first negative report in eight months.

The equity markets were all lower ahead of the data and these reports do not exactly signal any great confidence.

JON C. OGG

While the filing is for up to $120 million in common stock, no terms have been set regarding the number of shares to be offered and the price range for the offering.  LegalZoom noted that it had previously submitted its registration statement to the Securities and Exchange Commission on a confidential basis under the Jumpstart Our Business Startups Act.

Morgan Stanley and BofA Merrill Lynch are listed as the firm’s joint book-running managers for the offering; co-managers are listed as Stifel Nicolaus Weisel, RBC Capital Markets, William Blair, and Montgomery & Co.

Here is the company’s own description of its use of proceeds: “The principal purposes of this offering are to create a public market for our common stock and thereby enable access to the public equity markets by our employees and stockholders, obtain additional capital and increase our visibility in the marketplace. We currently intend to use the net proceeds to us from this offering primarily for general corporate purposes, including working capital and capital expenditures associated with scaling our operations, technology and infrastructure to support our growth. We may also use a portion of the net proceeds for the acquisition of, or investment in, technologies, solutions or businesses that complement our business, although we have no present commitments or agreements to enter into any acquisitions or investments.”

For 209, 2010, and 29011, revenues were $103.299 million, $120.771 million, and $156.066 million, respectively.  Net income attributable to shareholders for the same restive years was a loss of -$4.675 million in 2009, a loss of -$8.062 million in 2010, and positive earnings of $4.674 million in 2012.

JON C. OGG

FedEx has noted before that it plans to grow organically and to make small acquisitions, such as this one, to complement that internal growth. United Parcel Service Inc. (NYSE: UPS) took a different route to growth, acquiring Dutch firm TNT Express NV for $6.8 billion.

There is virtually no chance that FedEx can make enough acquisitions and integrate the companies acquired fast enough to challenge UPS or market leader DHL in Europe. Of course UPS has its own problems digesting the acquisition of TNT Express.

And both FedEx and UPS were probably counting on a bump in US business following the closure of thousands of post offices. Now that the USPS has come up with a plan to cut services without closing any of the offices, the two giant private carriers are probably re-calibrating 2012 forecasts.

Neither FedEx nor UPS shares are active in pre-market trading this morning.

Paul Ausick

[R]evenue was adversely impacted by lower rentals and financing revenue as a result of lower equipment sales in prior periods. Revenue was also impacted by a decline in supplies revenue due to fewer meters in service in the U.S. and lower mail volumes.

Other business equipment firms such as Xerox Corp. (NYSE: XRX) and Hewlett-Packard Co. (NYSE: HPQ) are also seeing flatter revenues due to cautious buyers, particularly in the small-to-medium sector. Economic uncertainty makes businesses hesitate to invest in more or newer equipment, regardless of whether or not the business has sufficient cash or credit because the business just can’t accurately predict future cash flows.

About its large customers, Pitney Bowes had this to say:

Many large enterprise customers, across business sectors, continued to prolong their capital investment decisions, and are retaining their current equipment longer than in prior years. This has caused delays in orders for inserting and production print equipment, especially in the U.S., thus adversely impacting revenue.

The company reaffirmed its adjusted EPS guidance for the full year at $2.05-$2.25. The consensus estimate calls for adjusted EPS of $2.12. Pitney Bowes said that 2012 revenue would come in within a range of -2% to +2% compared with 2011 revenue. The consensus estimate calls for revenue of $5.23 billion, down -0.9% from last year.

Pitney Bowes’ shares are off about -6.6% at $15.69, after posting a new 52-week low of $15.11. The prior range was $16.53-$25.03.

Paul Ausick

Along with Equifax Inc. (NYSE: EFX), Fair Isaac Corp. (NYSE: FICO), Moody’s Corp. (NYSE: MCO), and the Standard & Poor’s division of The McGraw-Hill Companies Inc. (NYSE: MHP), D&B provides the information many lenders use to make credit decisions. Unlike the other companies, D&B has not been able to hit an EPS estimate for several quarters in a row now. Revenue estimates have fared just as badly.

Perhaps as an effort to reset expectations, D&B revised its revenue growth estimate from a range of 3% to 5% to a new range of 0-3% when it reported quarterly results last night. The downward change likely recognizes the increasing competition from competitors like Equifax and Moody’s.

D&B’s shares are down -13.8% at $65.26 in a 52-week range of $58.50-$86.52.

Paul Ausick

• Business Activity Index at 54.6%, down by 4.3 percentage points lower than the 58.9 percent reported in March.
• New Orders Index at 53.5%, a decrease of 5.3 percentage points.
• Employment Index at 54.2%, a decrease of 2.5 percentage points.
• The Prices Index decreased 10.3 percentage points to 53.6 percent, indicating prices increased at a significantly slower rate in April when compared to March.

This is the crux of the report and pretty much what you need to focus on: “Respondents’ comments affirm the slowing rate of growth. In addition, they remain concerned about rising fuel costs and the impact on shipping, transportation and petroleum-based product costs.”   The good news is that the ISM data in the services (non-manufacturing) economy is still above the 50.0% line showing growth over recessionary trends.  The bad news is that this is getting dangerously close to the red-line of contraction.

JON C. OGG

So, why are things so bad in the garbage and waste management sector? It is almost scary if you reviewed the earnings report from last week’s reports from Waste Management Inc. (NYSE: WM), Republic Services Inc. (NYSE: RSG) and Waste Connections Inc. (NYSE: WCN). Even Progressive Waste Solutions Ltd. (NYSE: BIN) had a bad report. In case you forgot, Bill Gates has been a huge investor in this sector with a 15% or higher stake in Republic Services Inc. (NYSE: RSG) via his personal investment entity called Cascade Investment.

Last week, particularly Friday, was just brutal on the shares of these companies due to such poor earnings from the waste management sector leaders. A contrarian take against the grain would be that this sector just got a lot cheaper for those investors who have a very long-term outlook. We want to see which companies are now a bargain and which ones may still deserve some caution.

Waste Management Inc. (NYSE: WM) took it on the chin last week as booked revenue of $3.30 billion and, while that was above the consensus of about $3.2 billion, the non-GAAP earnings of $0.38 EPS was shy of the $0.41 EPS estimate as GAAP earnings shrank by 5% from a year earlier. The company also reported a drop in the gross margin, operating margin and net margin. The $15-plus billion garbage company was down by more than 3% when the other reports were taken into consideration, with shares trading just above $34 and very close to the Thomson Reuters consensus price target of $34.40. This was just a $36 stock on Wednesday and the 52-week range is $27.75 to $39.69.

Republic Services Inc. (NYSE: RSG) reported weaker-than-expected first-quarter results as revenue increased 0.9% to $1.98 billion, but earnings per share fell by 7.8% to $0.38 EPS based on lower recycled commodity prices and higher fuel costs. The $10 billion waste company was said to have lost a large national account due to competitive pricing that will cost about $25 million in 2012 sales and it noted a loss of one or two municipal disposal contracts. The company is holding on to its pricing structure and it did manage to raise volume and said that they are seeing positive C&D activity and special waste volume. Republic was down over 11.5% at one point Friday morning at $27.50 and the 52-week range is $24.72 to $33.10.

Waste Connections Inc. (NYSE: WCN) turned in sales growth of more than 13% to $376 million, which was just above estimates, and it claimed increased pricing strength and that its C&D waste volume offset commodities and fuel prices. Still, its EBITDA margin was lower at 30.5% based on lower recycled commodity values and also on higher expenses due to its County Waste acquisition in 2011. The company’s franchise market model is allowing for pricing power and supposedly keeping customer churn lower. Waste Connection shares were down more than 1% on Friday again with shares above $32 and its 52-week range is $29.06 to $35.95. This was probably the only bright spot, but with a $3.5 billion market cap its stock trend was dictated by problems at the larger peers.

U.S. investors often forget about Progressive Waste Solutions Ltd. (NYSE: BIN) because it is based in Canada, but it has a $2.5 billion market cap. Keep in mind that this is the old BFI Canada, and it offers waste services in Canada and in the United States. A weak report from this company last week took a lot of wind out of its sails as well: $0.19 EPS versus $0.24 EPS expected, but revenues rose 3.6% to $438.3 million versus $434.3 million expected. The company reaffirmed its 2012 outlook. Shares were down more than 6% at $21.40 on Friday against a 52-week range of $18.35 to $25.56. The consensus target from Thomson Reuters is closer to $25 over the next year.

Gabelli issued a report on Friday calling a Waste Connection private market value of $31 for 2012 and $34 in 2013. What is interesting is that Thomson Reuters has a consensus target objective of just over $38 for the next 12 months. Gabelli also maintained its Buy stance on Republic Services and Thomson Reuters had a consensus target of $34.60 before considering the double-digit percentage drop on Friday morning.

Raymond James downgraded Republic Services to Market Perform from Outperform based upon the report. We would not be surprised at all if there are more analyst downgrades due to how the whole sector was soft. These reports from last week may set a sour tone for the smaller US Ecology Inc. (NASDAQ: ECOL) as it is set to report its first quarter earnings on Tuesday, May 1, 2012. Its market cap is only $390 million.

Based upon the new share price drops, the dividends of each are looking better: a 3.9% yield for Waste Management Inc. (NYSE: WM), a 2.8% yield for Republic Services Inc. (NYSE: RSG) but only 1.1% for Waste Connections Inc. (NYSE: WCN). Progressive Waste Solutions Ltd. (NYSE: BIN) now has a 2.5% dividend yield.

Things are bad enough in the sector that Enerkem Inc., a Canadian biofuel company backed by Waste Management Inc. (NYSE: WM) and Valero Energy Corporation (NYSE: VLO), even withdrew its registration statement with the SEC that would have allowed it to raise almost $140 million in an initial public offering. Enerkem develops refineries that convert trash into gases that get reprocessed to be turned into ethanol and other chemicals. The outfit cited market conditions in the filing. This is sector-specific market conditions, because, in case you had not noticed, the market has managed to hold up well in earnings season. These “market conditions” are also against the backdrop of what has been a super-premium IPO market.

It may take a bit for the dust to settle here because this was widespread disruption. That being said, we would start to look at a contrarian outlook now that the sector is on sale for those investors who invest with a multiyear horizon. Republic Services Inc. (NYSE: RSG) took it on the chin the worst of the lot, and it is not easy to bet against Bill Gates for too long in his post-software investments.

JON C. OGG

If you use the PCE Price Index, the reading was +2.4%; and Bloomberg was projecting only +2.1%.

The report was held down by a deceleration in the private inventories and also by what was called a drop by about -2.1% in non-residential fixed investment like computers, structures, and heavy equipment.  The inventory issues is worth noting because an inventory build-up in the fourth quarter of 2011 was responsible for about half of the gains in Q4.

Austerity is alive, maybe.  Government spending was down by 3%, but that compares to -4.2% in the previous quarter.

It is the consumer that is saving GDP today because personal consumption was up by 2.9% and that was stronger than all of 2011.  The price index of personal consumption was up 2.4%.

Today’s data from the Commerce Department is the first look at Q1 GDP for 2012.  It will be revised twice over the next two months so it could be adjusted slightly higher or slightly lower as this is just the first reading.  It is obvious that growth is still under what the economy needs to truly be generating the adequate number of jobs and to be considered a healthy economy.  The other side of this coin is that those calling for another recession (it is too late for a double-dip recession to be possible now) will have to keep quiet for at least another quarter or two.

JON C. OGG