After US markets closed yesterday, S&P lowered its rating on Italy’s sovereign debt from ‘A+’ to ‘A’ with a negative outlook. In its report, S&P specified weakening economic growth prospects, its “fragile” government, and policy differences between the Berlusconi government and the parliament.

In what may be any rating agency’s first criticism at a government’s fiscal austerity measures, the ratings agency noted: “More subdued external demand, government austerity measures, and upward pressure on funding costs in both the public and private sectors will, in our opinion, likely result in weaker growth for the Italian economy compared with our May 2011 base-case expectations, when we revised the outlook to negative. We believe the reduced pace of Italy’s economic activity to date will make the government’s revised fiscal targets difficult to achieve.”  In other words, spending cuts by the Italian government are likely to stall the country’s economic growth. Such a situation will make it nearly impossible for the country to meet its new fiscal targets.

Iron Mountain Inc. (NYSE: IRM) received a ‘B+’ rating from S&P on its proposed $300 million senior subordinated notes due in 2019. The agency also placed a ‘BB-’ rating and a negative outlook on Iron Mountain’s corporate credit.

Discover Financial Services (NYSE: DFS) received a ‘AAA’ rating from S&P on Discover Card Execution Note Services $800 million DiscoverSeries notes. These notes are asset-backed securities ultimately collateralized by “receivables generated from designated Discover Card accounts.”

European Aeronautic Defence and Space Co. N.V. (OTC: EADSY), maker of the Airbus aircraft, received an outlook upgrade from ‘stable’ to ‘positive’ from S&P. The agency reaffirmed its ‘A-/A-2′ long- and short-term corporate credit ratings on the company.

Helix Energy Solutions Group, Inc. (NYSE: HLX), an oil field services firm, received a corporate credit rating boost from ‘B’ to ‘B+ from S&P. The rating on the company’s senior secured debt was also raised to ‘BB-’ and unsecured debt was raised from ‘CCC+’ to ‘B-’.

Elizabeth Arden, Inc. (NASDAQ: RDEN) received an upgrade from ‘stable’ to ‘positive’ from S&P. The agency also affirmed its ‘B+’ corporate credit rating.

Yum! Brands Inc. (NYSE: YUM) received a rating of ‘BBB-’ from S&P on a proposed offering of worth 350 million Chinese renminbi (about $55 million) in senior unsecured debt. The notes will rank equally with existing and future unsecured debt.

Monsanto Co. (NYSE:MON) received an ‘A2′ long-term debt and Prime-1 rating from Moody’s on its commercial paper.

Bill Barrett Corp. (NYSE: BBG) received a ‘B1′ rating from Moody’s on a proposed offering of $300 million in secured notes due 2019. Proceeds will be used to repay borrowing on the company’s revolving credit borrowings which funded acquisitions in 2011 and to support capital spending above operating cash flow. The company’s outlook retained a ‘stable’ rating.

Dynegy Inc. (NYSE: DYN) was placed on Rating Watch Negative by Fitch Ratings following the announcement of a $1.25 billion exchange offer. The offer includes debt with interest rates from 7.125% to 8.750%, all of which will be exchanged for new 10% senior secured notes.

AT&T (NYSE: T) was reaffirmed on Rating Watch Negative by Fitch Ratings. The company’s Issuer Default Ratings and senior unsecured debt rating have been rated ‘A’.

Many debt and credit ratings upgrades are noise, but there is one thing that usually rings true.  As companies see their credit ratings rise, that lowers their borrowing costs, and that in effect raises their earnings.  Credit ratings matter more now that America is no longer “AAA.”

Paul Ausick

Abovenet Inc. (NASDAQ: ABVT) +5.2%
AOL Inc. (NYSE: AOL) +2.6%
Cbeyond Inc. (NASDAQ: CBEY) +3.6%
Checkpoint Systems Inc. (NYSE: CKP) +10.6%
China Automotive Systems Inc. (NASDAQ: CAAS) +5%
CIGNA Corporation (NYSE: CI) +2.9%
Cinemark Hldgs Inc. (NYSE: CNK) +4.4%
Clearwire Corporation (NASDAQ: CLWR) +5.7%
Elizabeth Arden Inc. (NASDAQ: RDEN) +5.7%
Healthtronics Inc. (NASDAQ: HTRN) +32%
Health Net Inc. (NYSE: HNT) +5.8%
Ion Geophysical Corporation (NYSE: IO) +3.7%
Intermune Inc. (NASDAQ: ITMN)… although it imploded this week.
Keryx Biopharmaceuticals Inc. (NASDAQ: KERX) +6.8%
Medifast Inc. (NYSE: MED) +7.8%
MetroPCS Communications Inc. (NYSE: PCS) +4.1%
Pacer International (NASDAQ: PACR) +10%
Polypore International Inc. (NYSE: PPO) +15%
Teradata Corp. (NYSE: TDC) +3%
Titanium Metals Corp. (NYSE: TIE) +12%
The Advisory Board (NASDAQ: ABCO) +11%

Imagine how well some of these might have done had the market not been a blood-bath.

JON C. OGG

• American Express (NYSE: AXP) and Capital One (NYSE: COF) both graced the list of lows as GE’s consumer losses only added fuel to the fire.
• Blue Nile Inc. (NASDAQ: NILE) tankola, again.  Forget Valentine’s Day this year.
• Clorox Co. (NYSE: CLX) burns investors’ eyes as bad as it burns its client’s eyes.
• Elizabeth Arden (NASDAQ: RDEN) keeps falling after the bad news from it and its peers over the last week and a half.  Brittney Spears can’t help.
• FedEx Corp. (NYSE: FDX) keeps dropping. 
• Harley Davidson (NYSE: HOG) caught another case of HAGS and is believed to be in trouble all year after earnings.
• Intuitive Surgical (NASDAQ: ISRG) keeps getting pounded.  Down close to 70% from highs now.  Leonardo DaVinci would now sue over the use of his name.
• The Korea Fund (NYSE: KF) was down almost 7%.  We don’t like to put country funds or ETF’s today, but that Kim Chee from last night just didn’t sit well today.
• Microsemi (NASDAQ: MSCC) on earnings warning.
• Polaris Industries (NYSE: PII)… weak HOG sales from Harley, weak motorcycle and snowmobile relative?  Works every time.
• Rackspace Hosting (NYSE: RAX)… Racking the Rackers, in the server room….
• RealNetworks (NASDAQ: RNWK), a surprise but think of peers.  And when was the last time you bought anything from them?
• Seagate Technology (NYSE: STX) again… with the earnings it put up this week, you can call it Floodgate.

Jon C. Ogg
January 23, 2009

• Apollo Investment (AINV) Cut to Neutral at JPMorgan.
• Baker Hughes (BHI) Cut to Underweight at Morgan Stanley.
• Canadian National Railway (CNI) Cut to Neutral at Goldman Sachs.
• Elizabeth Arden, Inc. (RDEN) Cut to Market Perform at Wachovia.
• Kansas City Southern (KSU) Cut to Neutral at JPMorgan.
• Palm (PALM) Cut to Neutral at JPMorgan.
• Polo Ralph Lauren (RL) Cut to Sell at Goldman Sachs.
• Red Robin Gourmet (RRGB) Cut to Equal Weight at Morgan Stanley.
• Smith International (SII) Cut to Equal Weight at Morgan Stanley.
• Teradyne (TER) Cut to Perform at Oppenheimer.

Jon C. Ogg
January 20, 2009

Estee Lauder (NYSE: EL) lowered its fiscal-Q2 and Fiscal-2009 net salesand net earnings projections.  The company sees Q2 EPS of $0.75 to$0.82 versus $0.99 consensus estimates on roughly a 6% year- -over-yearconstant currency revenue basis. The company now sees earnings at $1.30 to$1.60 in fiiscal 2009 EPS rather than a prior range of $2.20 to $2.50. Consensus estimates are for earnings of $2.23.  The company noted that thedeteriorated global economic conditions during the quarter were wellbeyond its own expectations and the holiday shopping season was worsethan anticipated.  It now expects further uncertainty about futuremarket conditions and consumer spending patterns.  Foreign currencytranslation is expected to negatively impact net sales by 5% to 7%versus the prior year.  Estee Lauder shares are down almost 15% at$24.73, and its 52-week trading range is $24.24 to $54.75.

Elizabeth Arden (NASDAQ: RDEN) guided down numbers for itsDecember (Q2) down to $0.72 to $0.76 EPS. That is down from the $0.94First Call consensus.  It also sees $365 to $370 million in revenues,also under the $424.5 estimate.  For Fiscal-2009, the company sees$0.94 to $1.07 EPS rather than the $1.47 consensus.  What isinteresting here is that this implies that close to half of its entireshortfall will have come from this last quarter period.  Wall Streetdoesn’t believe the ladies here that are selling to Main Street.  Thisstock is down nearly 30% at $8.20 this morning.  Its "prior" 52-weektrading range was $10.55 to $21.79. 

We have not heard from Bare Escentuals, Inc. (NASDAQ: BARE) in sometime.  Its shares are down only 2% to $4.91 today.  The difference hereis that the stock already went to hell in a hand basket as its 52-week tradingrange is $4.91 to $29.90.  It looks like when women have to start chopping down on the expenses, maybe they don’t have to worry about "only buying natural products" if it comes down to "cheaper or nothing."  History dictates that cheaper usually prevails over the "nothing" scenario.

We also haven’t heard from Perelman’s baby, Revlon Inc. (NYSE: REV).  Its reverse stock split did rather well for a bit, but evenit has been cut by more than half.  Shares are down less than 1% todayat $6.35, and its "revised" 52-week trading range after the reversestock split is $5.65 to $14.85.

The real question may be what is going on with Avon Products Inc.(NYSE: AVP).  We saw estimates cut at BMO today and saw Citi trimestimates last week.  We have not heard a peep from the company ina while.  Its stock is falling as though the company is about to enterthe confession parade.  Shares are down more than 7% at $20.32 today,and its 52-week trading range is $17.45 to $45.34.  It is still thelargest of the cosmetics pure-plays as its market cap is $8.7 billion.

The good news is that most of the cosmetics leaders are profitable.  But they are not quite as recession-proof as many husbands might suspect.

Jon C. Ogg
January 16, 2009

• BMC Software (NYSE: BMC) Started as Neutral at UBS.
• Cinemark (NYSE: CNK) cut to equal-weight at Morgan Stanley.
• Citrix Systems (NASDAQ: CTXS) Cut to Market Perform from Outperform at FBR.
• CME Group (NYSE: CME) Raised to Buy from Hold at Citigroup.
• CTC Media (NASDAQ: CTCM) started as Overweight at Lehman Brothers.
• Double Hull Tankers (NYSE: DHT) raised to Neutral at JPMorgan.
• Elizabeth Arden (NASDAQ: RDEN) raised to Outperform at Oppenheimer.
• Hovnanian Enterprises (NYSE: HOV) Raised to Neutral from Sell at UBS.
• Tempur-Pedic (NYSE: TPX) cut to Perform at Oppenheimer.
• Whiting Petroleum (NYSE: WLL) started as Outperform at Wachovia.

Jon C. Ogg
June 17, 2008

MGM Mirage (MGM) Slowdown in casino earnings at key rival. Sells off to $47.89 from 52-week high of $100.50.

Pharmanet Development (PDGI) Awful quarter. Shares dumped to $15.41 from 52-week high of $43.05.

Elizabeth Arden (RDEN) Posts loss. Drops to $13.13 from 52-week high of $28.05.

Hologic (HOLX) Profit picture falls apart. Sells down to $21.25 from 52-week high of $36.44.

Irobot (IRBT) CFO departs as do solid numbers. Falls to $13.19 from 52-week high of $24.30.

Douglas A. McIntyre

If you have a baseball manager with a losing team the general manager or the team owner(s) give a vote of confidence…. and the manager is sent packing within a month.  But Britney as a brand is no baseball player, and there is surprisingly still a value or a franchise here for at least the time being.  Frankly, for most of 2007, it really looked like Britney Spears as a brand was getting tarnished (or self-mutilated) to the no-return level. 

It isn’t about the divorce from K-Fed or K-reject whatever.  America used to be "mom, baseball, and apple pie."  But now "step-mom, wrestling, and chaw" seems to be the accepted slogan.  She isn’t quite the looker of prior years.  But my own mirror would say the same.  So the hypocrisy is out the window. 

After the head shaving and the rehab earlier in the year I put in a call to Elizabeth Arden Inc. to flush out what the status would be of the falling star.  I’ve always said "follow the money" as the simplest explanation.  It seems Arden has the same idea.  Britney’s fragrances are still selling quite well, and this was surprising.  Some reports I have read put the Britney fragrances at roughly 10 million individual fragrance sales, although that hasn’t been released by the company.  A current reputation has seemingly not affected a corporate sponsor or branding deal here.

There is something about a "hit and run" incident of late and custody of the kids being turned back over to America’s least favorite ex-husband (at least in this decade).  This week, the controversies continue.  The record label moved up the release date of her new "Blackout" CD.  Some reports put the reason being to beat leaked songs on the Internet, but it’s hard not to think it might not have been to get in ahead of any more bad news about her.  Besides the gum chewing while smoking, there are probably a dozen other "occurrences" not mentioned.  Other allegations and rumors are something you won’t see here.

To my surprise it seems like Arden has a solid commitment to the Britney brand.  Not a vote of confidence, but a commitment.  Who knows if that lasts if Britney gets too tarnished.  But this seems different, and surprisingly it is even more different now with a new Britney launch.  Britney Spears hasn’t exactly been a good girl, or at least not anything close to a role model.  Corporations usually have "out" clauses if their star’s image gets too tarnished.  There is no way to know what is coming on the calendar and there is no way to know what will happen to the star.  But for now it seems the selling continues.

Is a call-in a channel check? No, not at one or a few places, anyway.  I called to the Macy’s that I sometimes go to and was surprised to hear the salesperson in the fragrances department say the new "believe" smelt quite nice and that she’d recommend it for a gift for a special someone after she went over to sniff it out.  I didn’t order it, but that is no fault of the Macy’s employee because I was just fishing.  I honestly expected something different and quite contrary.

Maybe not all of corporate America is cut-and-run at the first sign of trouble.  Personally, this isn’t about knocking a celebrity.  This isn’t about knocking a brand or an image.  This is about recognizing a brand and a commitment.  Maybe not even the top brass knows if this commitment will last.  But there is at least something worth noting about a company sticking with a less than perfect persona.  Follow the money seems to be working.  Time will tell the true outcome, but this is one that could have easily been covered in a different light if opinions or thoughts alone were applied.

Jon C. Ogg
October 12, 2007