Bank of America Corporation (NYSE: BAC) is actually indicated higher this morning by over 1% at $5.57 despite reports that it has been warned by regulators to bolster its financial position.

Brocade Communications Systems Inc. (NASDAQ: BRCD) may have turned in a net loss after items and options, but non-GAAP earnings were $0.16 EPS and $550 million versus estimates of $0.14 EPS and $527.4 million.  Shares were up 6% last night and the $4.48 close of Monday is still up 6.7% at $4.78 on Tuesday morning. 

Campbell Soup Company (NYSE: CPB) reported that normalized earnings were down nominally from a year earlier at $0.82 EPS and that sales fell 1% to $2.16 billion; estimates were $0.79 EPS on $2.2 billion in sales.

Chico’s FAS, Inc. (NYSE: CHS) reported that its third-quarter earnings was $0.16 EPS but after $0.02 in acquisition costs, while estimates were $0.20 EPS.  Sales were $538.5 million versus estimates of $548.5 million. Same-store sales in the quarter rose 3.7% versus 5% or more expected and it turned in another $0.05 dividend for a 1.8% or so dividend yield.

Focus Media Holding Ltd. (NASDAQ: FMCN) was crushed yesterday with roughly a 40% drop after short seller Muddy Waters raised concerns about the company.  The company has denied the allegations and said that the information provided was misrepresented.  Shares are trading up 12% at $17.40 so far this morning, but this is a fluid situation and the “Muddy Waters” stocks tend to remain highly volatile for a period after a report of this sort is issued.

Market Vectors Egypt Index ETF (NYSE: EGPT) has not traded but trading on the Egyptian Exchange was halted after a 4.5% broad market drop due to continues protests and violence in Cairo after reports of dozens of deaths.

Harman International (NYSE: HAR) had its CEO featured on a Jim Cramer interview last night and Cramer said it is now getting to be a bargain at barely 10-times earnings with 20% growth possibilities.  Zacks also named it the value stock of the day this morning. 

Hewlett-Packard Co. (NYSE: HPQ) is now down 1% at $26.59 despite having been up almost 4% after earnings.  Some wanted a better path to a return of growth but frankly the report and even the lower guidance should have been enough to quell at least some fears about the company.

Jack in the Box Inc. (NASDAQ: JACK) was up 4% in the after-hours on Monday after beating earnings estimates with higher same-store sales. Volume is very light and the stock is only indicated up 1% so far in early bird trading.

Medtronic Inc. (NYSE: MDT) has reported earnings of $0.84 EPS adjusted on $4.13 billion in sales; estimates were $0.82 EPS and $4.1 billion in sales. The medical devices giant has guided its fiscal year (April-2012) to $3.43 to $3.50 EPS versus estimates of $3.44 EPS.

Netflix, Inc. (NASDAQ: NFLX) had its secondary and placement offering announcement last night and now shares are getting hit all over again after a SELL rating was slapped on the stock.  Netflix is trading down 5.2% at $70.60 in active trading.

Shanda Interactive Entertainment Ltd. (NASDAQ: SNDA) is getting acquired after receiving a “going private” letter a month ago.  Monday’s ADS close in New York was $39.39 and the buyout price $41.35 per ADS.

JON C. OGG

Amgen Inc. (NASDAQ: AMGN) Cut to Market Perform at BMO.
AutoNation Inc. (NYSE: AN) Raised to Neutral at Goldman Sachs.
Boston Properties Inc. (NYSE: BXP) Maintained Buy but cut target to $105 from $120 at Argus.
Cree Inc. (NASDAQ: CREE) Maintained Buy with $33 target at Canaccord Genuity.
Dole Food Co. Inc. (NYSE: DOLE) Cut to Underperform with $9 target at BofA/ML.
Garmin, Ltd. (NASDAQ: GRMN) reiterated Outperform as Bull of the Day at Zacks.
Gilead Sciences Inc. (NASDAQ: GILD) Raised to Outperform at BMO; Raised to Buy at Citigroup (late-Monday).
Hartford Financial Services Group (NYSE: HIG) Cut to Underperform as Bear of the Day at Zacks.
Harman International Industries Inc. (NYSE: HAR) named as Value stock of the day at Zacks.
Microsoft Corporation (NASDAQ: MSFT) Started as Hold at ThinkEquity.
Netflix, Inc. (NASDAQ: NFLX) Re-initiated as Sell with $60 target at Canaccord Genuity.
Pharmasset, Inc. (NASDAQ: VRUS) downgraded by Wells Fargo, UBS, Canaccord Genuity, Leerink Swann, and Citigroup after super-premium buyout.
Tyson Foods, Inc. (NYSE: TSN) Reiterated Buy at BofA/ML.
Wynn Resorts Ltd. (NASDAQ: WYNN) Cut to Neutral at Janney Capital.
YUM! Brands, Inc. (NYSE: YUM) added to U.S. Focus List at Credit Suisse.

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The SPDR S&P 500 (NYSE: SPY) rose by 10.9%. but the gain from trough to peak was far more.  We have offered some color on each and shown how much implied upside is there to the Thomson Reuters consensus analyst price target as well.  These gainers are listed lowest to highest on a percentage basis for the month.

Denbury Resources Inc. (NYSE: DNR) rose by 36.5% as shares rose from $11.50 to $15.70. Analysts have a consensus price target of $24.40. The company acquires and develops oil and gas properties in the Gulf Coast states.  The company announced a $500 million share buyback during October, but it also announced that its President & COO has left the company.

Valero Energy Corporation (NYSE: VLO) saw a 38.4% gain as the stock rose from $17.78 at the end of September to $24.60 at the end of October.  Analysts have a consensus price target of $31.50.  Valero was the subject of buyout speculation and its shares have not really sold off after word came that one rumored acquirer was not looking o acquire it.

National Oilwell Varco Inc. (NYSE: NOV) saw a 39.3% rise from $51.22 at the end of September to $71.33 at October’s end.  Analysts have a consensus price target of $89.75. If the offshore oil market is going to be opened back up, having a an offshore rig manufacturing business is going to be robust again.

Joy Global, Inc. (NASDAQ: JOYG) saw a gain of 39.8% from $62.38 on September 30 up to $87.20 at the end of October.  Analysts have a consensus price target of $102.00.

Juniper Networks, Inc. NYSE: JNPR) rose by 41.8% in October $24.47 versus $17.26.  The turnaround in networking is being seen in the stock. Analysts have a consensus price target of $25.03. Juniper has risen off of lows just as many other networking equipment players have seen.

Goodyear Tire & Rubber Co. (NYSE: GT) rolled on and on for a 42.3% gain as shares went from $10.09 at the end of September to $14.36 at the end of October.  Analysts have a consensus price target of $18.69.  Goodyear is back to profits and shares are actually still very cheap at about 7-times a blended forward P/E for 2011 and 2012 estimates.

El Paso Corp. (NYSE: EP) saw a 43.1% gain for the month but we would not that this is due mostly to the acquisition of the company.

F5 Networks, Inc. (NASDAQ: FFIV) had a very large run as the network equipment player bounced hard off its lows.  A move from $71.05 at the end of September to $103.95 was up 46.3%. Analysts have a consensus price target of $106.67.

Nabors Industries Ltd. (NYSE: NBR) was one of the top performers for October as the shares rose from $12.26 to $18.33, generating a 49.5% gain. The $100 million payout for the CEO exit is under criticism, but the oil and gas driller did beat earnings and has reorganized its management structure.  Analysts have a consensus price target of $27.33.

Harman International Industries Inc. (NYSE: HAR) saw a rise of 51.5% as the stock rose from $28.53 on a dividend-adjusted basis up to $43.16. Analysts have a consensus price target of $47.25.  In late October came word of higher 2012 guidance as well as a buyback of up to $200 million in its stock over the next year.

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American Water Works (NYSE: AWK) Cut to Neutral at HSBC.
BP plc (NYSE: BP) Raised to “A” at Ftich on debt ratng.
Barclays plc (NYSE: BCS) Cut to Market Perform at Bernstein.
Boston Properties (NYSE: BPX) Cut to Hold at Stifel Nicolaus.
BorgWarner (NYSE: BWA) Cut to Neutral at JPMorgan.
Costco Wholesale (NASDAQ: COST) Raised to Buy at Goldman Sachs.
Harman International (NYSE: HAR) Cut to Neutral at JPMorgan.
Hewlett-Packard Co. (NYSE: HPQ) Cut to Neutral at UBS.
Intel Corporation (NASDAQ: INTC) Cut to Neutral at UBS.
Lear Corp. (NYSE: LEA) Cut to Neutral at JPMorgan.
Priceline.com (NASDAQ: PCLN) Started as Market Perform at Morgan Keegan (late Tuesday).
Tenneco (NYSE: TEN) Cut to Neutral at JPMorgan.
Time Warner Inc. (NYSE: TWX) Cut to Hold at Benchmark Capital.
Wipro (NYSE: WIT) Started as Negative at Susquehanna.

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JON C. OGG

Blue Coat Systems Inc. (NASDAQ: BCSI), in proxy appliances and related software and services for optimize and secure applications, blamed weakness in its European business and macroeconomic issues for its lower-than-expected outlook for the first quarter with earnings in the last two weeks.  The company said that it will be in a range of $0.35 to $0.40 EPS with revenue of $121 to $126 million.  Thomson Reuters had estimates of $0.40 EPS and $132.1 million in revenue at the time.  Not a huge-huge lowering, but it came in a climate when investors were still at least somewhat bullish.  When that hit in late-May, shares went from $28.84 down to $21.47 and shares are hovering right around $22.00 now.

What is interesting is that McDonald’s Corp. (NYSE: MCD) today posted strong sales with same-store gains up 3.4% in the U.S. and up 5.7% in Europe.  But then came word that McDonald’s sees a currency frag against earnings from Europe and elsewhere.   McDonald’s noted that it sees currency conversion hurting its full year net income now rather than earlier expectations for a slight benefit as it is now more than half outside of the United States.

McDonald’s came on the heels of a further disclosure yesterday from Burger King Holdings Inc. (NYSE: BKC) that it expects an unfavorable currency impact (mostly Euro) to cut 1 or 2 cents off of its quarterly earnings estimates.  If that is so, then Thomson Reuters estimates, which have already recently come down 1 cent to $0.35 EPS, could come down further.

3M Co. (NYSE: MMM) had its CFO at an investor conference say that the falling Euro could knock off about $0.05 EPS from its full-year earnings guidance previously put at $5.40 to $5.60.  But he also said that the downside could be drug down further if this decline turns out to be structural rather than mechanical.  The bulk of the impact will come in the second half of 2010 as its rolling currency hedges unwind.

Suntech Power Holdings Co. Ltd. (NYSE: STP) reported last week that is earnings were above plan and it raised shipment forecasts for 2010 by about 4%.  But its stock slid over added fears of a weakening Euro because almost 70% of its Q1-sales were in Europe.  The company valued the Euro’s decline cost it about $24.5 million.

Elsewhere there are concerns which may be “hopefully thinking” more than entrenched in reality.  At Hewlett-Packard Co. (NYSE: HPQ) after the recent earnings report, CEO Mark Hurd discounted the Euro decline concerns and a later negative impact on sales. Hurd said a strong Euro (weak dollar) is good for them, but he said the Euro impact was overplayed.  Approximately one-quarter of its business is derived in Europe.  It will be interesting to see if H-P keeps that same stance since a further erosion has taken place.

What you are starting to see is a pattern confirmation.  It is not a pattern of death, because currencies do move.  But strong and severe moves in this short of a time do often have an impact for companies.  Hedges are in place at many firms, but companies often are either unable to hedge against such severe moves or they deem it too expensive to hedge above and beyond certain target-ranges.  We sill have over three weeks until the end of the second calendar quarter, so you can expect more news from companies on their Euro exposure.

That list from mid-May with companies having large Euro exposure included the following, and an explanation of the exposure for each can be found here:

• Carnival Corp. (NYSE: CCL),
• Electronic Arts, Inc. (NASDAQ: ERTS),
• First Solar Inc. (NASDAQ: FSLR),
• Flowserve Corp. (NYSE: FLS),
• Harman International Industries Inc. (NYSE: HAR),
• International Flavors & Fragrances Inc. (NYSE: IFF),
• Millipore Corp. (NYSE: MIL),
• and Philip Morris International, Inc. (NYSE: PM).

JON C. OGG

Carnival Corp. (NYSE: CCL) said in its latest annual report, “Our European brands represent 33% of our total capacity at November 30, 2009, and we expect them to increase to 37% of our total capacity by 2012, assuming no new acquisitions, transfers or withdrawals are announced other than as previously discussed.”

Electronic Arts, Inc. (NASDAQ: ERTS) said in its year ago annual report that international net revenue increased by 4% to $1.8 billion, which it listed as 43% of total net revenue in fiscal year 2009.  Unfortunately, that was listed as  Europe, Australia, Asia and Latin America by the company.  Reuters listed the EMEA amount as 38% of revenues.

First Solar Inc. (NASDAQ: FSLR) has over half of its business tied to the E.U. region. Its 2009 annual report noted that Blizstrom GmbH, EDF EN Development, Gehrlicher Solar AG, Juwi Solar GmbH, and Phoenix Solar AG in 2009 each accounted for between 10% and 19% of all component segment sales.  Reuters noted that its revenue exposure to EMEA (Europe, Middle Esat and Africa) was 77%.  This is getting the double-whammy as oil prices are heading further south each day along with the Euro.

Flowserve Corp. (NYSE: FLS) for its flow controlled equipment said that Europe accounted for 25% of its 2009 revenues in its annual report.

Harman International Industries Inc. (NYSE: HAR) has significant exposure.  The Stamford, Connecticut-based maker of audio products and electronic systems said, “Sales to Audi/Volkswagen accounted for 15%, sales to BMW accounted for 15% and sales to Daimler accounted for 8% of our total consolidated net sales for the fiscal year ended June 30, 2009.”  That is 38% tied to those three E.U. manufacturers.

International Flavors & Fragrances Inc. (NYSE: IFF) said in its latest annual report, “For the year ended December 31, 2009, 35% of our sales were to customers in Europe, Africa and Middle East (“EAME”), 26% in North America, 24% in Greater Asia and 15% in Latin America.”

Millipore Corp. (NYSE: MIL) showed in its 2009 Annual Report that some 40% of its $1.65 billion in revenues came from the European Region.  This is in life sciences tools.

Philip Morris International, Inc. (NYSE: PM) had over 27% of its 2009 cigarette shipment volume tied to the European Union.  The difference is that over 40% of its operating companies’ income was tied to the E.U.  The 2009 cigarette shipments were down 3.3%, revenue was down 6.6% and income outside of currency grew 4.4% in 2009.

JON C. OGG

Coinstar (CSTR) Started as Overweight at Thomas Weisel.
Costco (COST) raised to Market Perform at William Blair.
GOL Linhas Areas Inteligentes S.A. (GOL) Raised to Buy at Argus.
Google (GOOG) Raised to Buy at ThinkEquity.
Harman (HAR) Started as Overweight at JPMorgan.
Lowe’s (LOW) Raised to Overweight at Morgan Stanley.
Mastercard (MA) Started as Buy at Jefferies.
Time Warner (TWX) Started as Outperform at Wells Fargo.
Visa (V) Started as Buy at Jefferies.
Warner Chilcott (WCRX) Raised to Buy at Jefferies.

JON C. OGG

Before the market this morning came a release from Harman stating that the company had no communications regarding a tender offer.  The buyout price in the fake news was $49.50, after shares closed at $25.18 Friday.  The shares opened at $26.03 and traded as high as $27.71 before the selling came on.  Shares have slid all day and are now down 15% late in the day around $21.35.  The good news about this compared to the old Emulex Hoax is that the garbage in and garbage out trading was very short lived and not on much volume before the market opened.  The bad news is that Harman has traded over 10-times volume on what should have been a low-volume day.

In mid-2000, Emulex suddenly took a dive on press release of a press release that the company’s CEO was stepping down, that earnings guidance was being dropped, and that an SEC investigation was underway.  The problem is that the news was fake, and was nothing more than a short seller manipulating the stock.  Internet Wire ran the story as a press release, yet it was filed by a former Internet Wire employee that faked the news.  Nonetheless, shares fell from north of $100.00 to under $50.00.  The NYSE did not stop the carnage in time, and the manner in which it broke trades based upon cut-off times caused severe damage to many traders and investors.

With AME being an international ‘news’ source, it may be hard for prosecution to come in the same manner.  The SEC and the FBI may have a harder time pinning this one down.  But the Emulex Hoax was punished with a prison sentence of nearly 4 years.  Unless the odds are high that a real buyout letter just got lost in the mail system, then someone needs to be reminded about securities law violations with a jail sentence.

JON C. OGG
JULY 20, 2009