BloggingStocks

EDS shareholders want to postpone acquisition by Hewlett-Packard

Brian White — 2008-07-22T10:43:00+00:00

Filed under: Deals, Hewlett-Packard (HPQ), Electronic Data Systems (EDS)

Shareholders of EDS Corp. (NYSE: EDS) are starting to fidget in their collective seats now that the a shareholder meeting between the company and suitor Hewlett-Packard Corp. (NYSE: HPQ) is scheduled for July 31st. The delay is being brought on by a contingent of shareholders that believes the price H-P will be paying for EDS is, of course, too low.

The shareholders claim that the $25 per share price is too low in addition to a provision that doesn't allow the EDS board to accept higher offers, should one be brought forth. Dallas-area law firm Baron & Budd said "With increased revenues over the past 12 months and 2008 projections on track, the shareholders are questioning why EDS is accepting what many experts consider to be an undervalued share price." Since EDS is headquartered in Plano, Texas -- just outside Dallas -- perhaps some heavy-handed Texas shareholders don't want to sell out to a west coast firm? Who knows.

EDS continues to believe the acquisition by H-P is still in the best interests of the company. A combined HP-EDS would have more than 200,000 employees with operations in more than 80 countries. The combination would form a large challenge to business services and consulting company IBM Corp. (NYSE: IBM) as H-P tries to conquer yet another giant after taking the PC sales leadership crown from Dell, Inc. (NASDAQ: DELL) in 2007.

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Hewlett-Packard boots up a quarter of earnings and cash-flow growth

Steven Mallas — 2008-05-21T08:20:00+00:00

Filed under: Earnings reports, Dell (DELL), Hewlett-Packard (HPQ), International Business Machines (IBM), Electronic Data Systems (EDS)

Hewlett-Packard (NYSE: HPQ), an arch competitor of Dell (NASDAQ: DELL), reported Q2 earnings on Tuesday. Looking through the release, I see quite a few things to like about the H-P story.

Revenues increased 11% to $28.3 billion. This increase was aided by international sales and the weak dollar. On an adjusted basis, earnings per share increased 24% to 87 cents. Furthermore, the adjusted operating margin increased 100 basis points to 10%. Cash generated from operations was $4.8 billion during the quarter, which the release categorized as a record statistic. Cash flow is one of my favorite metrics, and I love it when it is doing well. In fact, according to the transcript of the conference call at Seeking Alpha, the six-month operational cash-flow figure had increased 92% over the comparable time frame one year ago, and free cash flow had more than doubled for the same period.

Honestly, it seems like H-P is managing itself very skillfully, leveraging its various brands in the PC sector to great effect. Guidance calls for adjusted earnings of $3.54 and $3.58. This means that, in my opinion, H-P's stock isn't too expensive. It's also trading away from the 52-week high, which is another positive. Of course, the big story surrounding the company at the moment is its announced acquisition of Electronic Data Systems (NYSE: EDS). As Tom Taulli has observed, the EDS buy is logical. Combining H-P's expertise at providing technologies to the PC world with the services portfolio provided by EDS will most likely make HP an even bigger force, and it could give a behemoth like IBM (NYSE: IBM) new challenges.

So, H-P seems to be thriving, and it seems to be on the right track with its latest strategic acquisition. There's no question that this is a blue-chip operation that is bringing in a ton of cash and is well-positioned for long-term growth. I think the guidance is fine, and I easily call myself bullish on H-P's future.

Disclosure: I don't own shares in any company mentioned here; positions can change at any time.

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Five stocks to love from CNNMoney

Eliza Popescu — 2008-05-19T16:19:00+00:00

Filed under: Hewlett-Packard (HPQ), International Business Machines (IBM), Electronic Data Systems (EDS), Genentech Inc (DNA)

It has been a rocky year for Wall Street, but even amid the uncertain market conditions there are some companies that are playing with a lot of cash. In addition, they know how to wisely use their funds, which makes them strong enough to beat any challenge.

One important factor that determines the stability of a company is its corporate cash flow. CNNMoney is looking at stocks with both healthy cash flow and a surplus of cash, which helps them avoid tough situations where they may need to raise their capital (check out its slideshow of these five picks). Another element that CNNMoney takes into account when picking companies is their ability to reinvest cash in ways that assure them a nice profitability.

Let's look at some of the companies that CNNMoney likes:

Hewlett-Packard (NYSE: HPQ) stirred up a lot of comments after it announced its plans to buy Electronic Data Systems (NYSE: EDS) for about $14 billion in order to better compete against its major rival IBM (NYSE: IBM). The company proved its performance for the past three years as its stock has more than doubled.
National Oilwell Varco (NYSE: NOV) managed to double its profit last year to $1.3 billion and is seen by some analysts as a "capital-generating machine." In addition, current soaring oil prices make the company a nice bet amid the weak environment.
Big Lots (NYSE: BIG) successfully passed through the current economic climate and announced better-than-expected earnings over the past eight quarters. Analysts also expect the company to improve its sales due to the acquisition of furniture line Broyhill.
Accenture (NYSE: ACN) made itself evident by its ability to efficiently use the cash. Its strategy was quite simple as it focused on investing money in people. Could be surprising but this came with 86% return on equity.
Genentech (NYSE: DNA) used its cash to fund research and development. The company exploited areas that other drugmakers may have ignored and this assured it the success.

Cash is the key factor that makes a company fail or succeed in the market. CNNMoney advises us to seek those companies that are able to generate a lot of cash, which brings them the victory crown.

Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.

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Early analyst calls: EDS, JAVA ...

Douglas McIntyre — 2008-05-14T07:40:00+00:00

Filed under: Before the bell, Analyst upgrades and downgrades, Staples Inc (SPLS), Sun Microsystems (JAVA), Electronic Data Systems (EDS)

Oppenheimer & Co reiterated its "outperform" rating on STEC (NASDAQ: STEC) saying that "We remain bullish on STEC's unfolding solid state drive (SSD) story and see further room for shares to run," according to the AP.

Wachovia upgraded Sun Microsystems (NASDAQ: JAVA) from "market perform" to "outperform," according to Briefing.com The news service also writes that Bernstein has downgraded EDS (NYSE: EDS) to "market perform" to "outperform."

Staples (NASDAQ: SPLS) raised to "buy" from "hold" at Jefferies according to Briefing.com.

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Closing Bell: survey says national home prices tumbled 7.7%

Jon Ogg — 2008-05-13T16:14:00+00:00

Filed under: Dell (DELL), Hewlett-Packard (HPQ), International Business Machines (IBM), Clear Channel Commun (CCU), Countrywide Financial (CFC), Electronic Data Systems (EDS)

National home prices tumbled by 7.7% in the first quarter in a recent survey. While retail sales did fall -0.2% overall in the month of April, the ex-autos numbers were actually positive by +0.5%. Below are the unofficial closing levels for major averages:

DJIA 12,833.97 (-42.34; -0.33%)
S&P500 1,403.42 (-0.16; -0.01%)
NASDAQ 2,495.34 (+6.85; +0.28%)
10YR-TBond 3.909% (+0.134%)
TOP 10 ANALYST CALLS

Clear Channel Communications Inc. (NYSE: CCU) was up again on news of a settlement between the buyers and the banks for the $20 billion delayed buyout by Bain Capital and THL Partners. The court was adjourned until 2 pm today to allow settlement talks to continue. Shares were up 4% to $34.24 at the end of the day.

Countrywide Financial Corporation (NYSE: CFC) is on track for acquisition by Bank of America Corporation (NYSE: BAC) in the third quarter. Bank of America reported increased credit costs today as a result of the economic downturn and stated that the acquisition will alleviate the damage. Shares were up 3% at $4.93 at the end of the day.

Dell Inc. (NASDAQ: DELL) is rising today in the wake of the Hewlett-Packard Co. purchase of Electronic Data Systems Corp. for $13.9 billion in cash. Dell also announced a promo to encourage consumers to spend their tax rebates on personal computers. Shares were up 3% at $20.00 in the final minutes of the day.

Hewlett-Packard Company (NYSE: HPQ) announced the purchase of Electronic Data Systems Corporation (NYSE: EDS) for $25 per share for a total value of $13.9 billion in cash today. The combination will make the second-largest tech services provider behind International Business Machines Corporation (NYSE: IBM), whose shares were up almost 1% at $126.32 late in the day. Both Dell and Hewlett-Packard recently posted earnings that beat expectations. Hewlett shares were down more than 5% at $44.34 and EDS Shares were up 1% at $24.32 at the end of the day.

Sovereign Bancorp, Inc. (NYSE: SOV) was upgraded by Friedman Billings today after successfully raising $1.2 billion in a public common stock offering yesterday in its efforts to raise $1.5 billion to fortify itself in the economic uncertainty. Shares rose by more than 5% to $8.59 in the final minutes of the day.

Website Pros, Inc. (NASDAQ: WSPI) fell hard today after reporting earnings Tuesday evening. The company posted a net income of $0.6 million, the same as the first quarter in 2007, despite revenue growth of 88% and a non-GAAP operating income increase of 142%. Shares were down over 12% at $8.79 late in the day.

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Analyst downgrades: SNN, BSY, JSAIY, BE, LHCG and EDS

Eric Buscemi — 2008-05-13T11:33:00+00:00

Filed under: Analyst reports, Analyst upgrades and downgrades, Hewlett-Packard (HPQ), Electronic Data Systems (EDS)

MOST NOTEWORTHY: Smith & Nephew, British Sky Broadcasting and Electronic Data Systems were today's noteworthy downgrades:

Smith & Nephew (NYSE: SNN) was cut to Underweight from Neutral at JP Morgan, citing deteriorating fundamentals in several of SNN's key business lines.
Goldman removed British Sky Broadcasting (NYSE: BSY) from its Conviction Buy List and said shares continue to trade at all-time low multiples and that the timing with Sky-Virgin dispute remains unclear. Shares remain Buy rated.
Friedman Billings downgraded Electronic Data Systems (NYSE: EDS) to Market Perform from Outperform based on valuation following the Hewlett-Packard (NYSE: HPQ) news.

OTHER DOWNGRADES:

Goldman downgraded J Sainsbury (OTC: JSAIY) to Neutral from Buy and removed shares from the Conviction Buy List.
Goldman also removed Hewlett-Packard from its Conviction Buy List.
Citigroup cut BearingPoint (NYSE: BE) to Hold from Buy.
Wachovia downgraded LHC Group (NASDAQ: LHCG) to Market Perform from Outperform.

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HP bets the ranch

Tom Taulli — 2008-05-13T10:50:00+00:00

Filed under: Deals, Hewlett-Packard (HPQ), International Business Machines (IBM), Electronic Data Systems (EDS)

For the past year, Hewlett-Packard (NYSE: HPQ) posted revenues of $107 billion. So, to grow just 5%, the company will need to essentially create another Fortune 500 company.

That's something HP's CEO, Mark Hurd, definitely has mentioned on various occasions. Basically, how can a behemoth continue to grow?

Perhaps a smart strategy is to make big acquisitions?

Well, today HP has announced a hefty $13.9 billion buyout deal for EDS (NYSE: EDS), an information technology (IT) consulting operator. Over the past year, EDS posted about $22 billion in revenues.

But Hurd is not just concerned about the top-line. If anything, he's highly disciplined with generating profits. In fact, since he has come on board HP (back in 2005), Hurd has been masterful in finding efficiencies - while still pushing revenue growth.

While the history of transformative M&A is filled with failures, with the HP-Compaq combination a prime example of what can go wrong, the strategic rationale for the EDS deal makes sense. In today's global environment, customers want strong technologies but also sophisticated services. Actually, companies are increasingly outsourcing services to players like EDS.

Moreover, with much more heft, HP and EDS will become a formidable alternative to IBM (NYSE: IBM), which has proven the technology/services model.

Finally, I'm sure that Hurd will take out his cost-cutting knife. It's something that hasn't been emphasized but I'm sure it will be a big part of the deal.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

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Can HP compete against IBM in services?

Peter Cohan — 2008-05-13T09:30:00+00:00

Filed under: Deals, Hewlett-Packard (HPQ), International Business Machines (IBM), Electronic Data Systems (EDS)

The Wall Street Journal reports that Hewlett Packard (NASDAQ: HPQ) will spend $12.8 billion to buy Electronic Data Systems (NYSE: EDS). While this combination would make HP the second largest, behind International Business Machines (NYSE: IBM) in computer services, this may not be a good way to spend $12.8 billion.

That's because EDS and HP would under perform in services when it comes to profitability. EDS's bigger business earned a 1% net profit margin in the first quarter. But HP's services business generated a far higher 9% estimated net margin. Unfortunately -- for reasons described below -- the combined company will probably have lower margins.

Meanwhile, IBM's profit lagged HP's slightly -- it made an estimated 7% net margin in the first quarter in its services business. But IBM is and will remain a much bigger player. Combined, EDS and HP's services business will control 5.3% -- lagging IBM. That's because IBM controlled 7.2% of the tech-services market in 2007 while EDS was a distant second at 3% and HP was fifth, with a 2.3% share.

I think HP's most profitable business, printers, might be able to make better use of the $12.8 billion in capital. This Imaging and Printing Group earned a 13% estimated net margin. It grew a mere 4% to $7.3 billion in revenue and given that this unit is by far the most profitable in HP's stable of businesses, this would appear to be the best place to invest for future growth.

Now may be a good time to sell HP stock. Mark Hurd came into HP as a nuts-and-bolts operator. This deal suggests that Hurd has run out of growth options and that HP can't grow earnings through more cost cuts. I have no doubt that Hurd could cut costs once EDS has been integrated.

However, government work -- which accounts for the biggest part of EDS's revenue -- is inherently less profitable than the commercial work which HP performs in its services business. So, I would guess that the EDS merger will lower HP's services margins.

What HP really needs -- and lacks due to Hurd's particular skills -- is the ability to innovate as it did successfully in printers back in the 1980s and 1990s when it invented the highly profitable printer and ink business.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

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Cramer on BloggingStocks: Fluor shows the power of execution

Jim Cramer — 2008-05-13T09:00:00+00:00

Filed under: Hewlett-Packard (HPQ), Market matters, International Business Machines (IBM), Electronic Data Systems (EDS), Commodities, Oil, Stocks to Buy, Cramer on BloggingStocks

TheStreet.com's Jim Cramer says this report highlighted where the success lies in this market: energy and petroleum.

Fluor's (NYSE: FLR) (Cramer's Take) a monster. It shows you that what has hurt the other companies, particularly Chicago Bridge & Iron (NYSE: CBI) (Cramer's Take), is pure execution.

This gigantic beat also serves to remind us of the big dichotomy. You are either in the energy and petroleum products game or you are in a lot of games that don't work.

It's not easy for these companies, some of which have lived off the duress of state and local governments, including Shaw (NYSE: SGR) (Cramer's Take) and to a certain extent Aecom (NYSE: ACM) (Cramer's Take) and URS (NYSE: URS) (Cramer's Take), to become oil-and-gas plays.

The only ones that have transcended it beside Fluor are Foster Wheeler (NASDAQ: FWLT) (Cramer's Take) and Jacobs Engineering (NYSE: JEC) (Cramer's Take), and the only reason you would really know that is longevity. I remember in the early 1980s when FLR and then FWC would compete directly for all of the huge projects after the second oil shock.

Fluor's earnings have been obscured by a couple of overrun products over the years, deals that they lowball bid to do embassies basically to fill the order book. That's all changed now, as the company has cycled through those and is now winning huge business and not having a problem converting that business into earnings per share.

Foster Wheeler's doing the same. If it hadn't highlighted a small domestic issue signaling, falsely, to the analysts of problems to come, problems foretold by McDermott (NYSE: MDR) (Cramer's Take), it would be in the $70s by now, too.

I think it is going there.

Today.

Random musings: I am not a fan of the EDS (NYSE: EDS) (Cramer's Take) deal. I am a fan of Hewlett-Packard's (NYSE: HPQ) (Cramer's Take) Mark Hurd so he must see something. I had not thought of IBM (NYSE: IBM) (Cramer's Take) pulling away but it looks like that's been happening.

RELATED LINKS:

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer was long Foster Wheeler.

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HP and EDS: No hardware for us

Douglas McIntyre — 2008-05-13T08:50:00+00:00

Filed under: Deals, Competitive strategy, Hewlett-Packard (HPQ), International Business Machines (IBM), Electronic Data Systems (EDS)

By looking at other companies that sell services and PCs, it has occured to Hewlett-Packard (NYSE: HPQ) that the hardware business is getting more competitive and that margins are moving down, But hardware is still the largest revenue center at the big tech company, and that may be the single greatest failing of the current management. It has not created large enough software and services businesses to match the hardware sales.

HP brings in less that 25% of its revenue from services. But that business is growing quickly. According to the company's 10-Q, it had revenue of almost $4.4 billion in the first quarter. In the same period a year ago, that number was $3.9 billion.

The prevailing theory is that HP plans to buy EDS (NYSE: EDS) for $12.6 billion for its revenue from consulting and outsourcing to better compete against IBM (NYSE: IBM). That may be true, but the actual reason may be much more simple than that. With its stock up 50% over the last two years, HP needs a new business to keep its revenue growing and its shareholders happy. That is not going to come from its ink and printer business. Buying EDS almost guarantees another two years of rising revenue and earnings.

Douglas A. McIntyre is an editor at 247wallst.com and the author of the Ten Stocks Under $10 letter.

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Gas crunch hits home, ways to make your home a cash cow & most overpaid athletes - Today in Money 5/13

Allan Halprin — 2008-05-13T08:50:00+00:00

Filed under: Microsoft (MSFT), Hewlett-Packard (HPQ), Wal-Mart (WMT), Money and Finance Today, Staples Inc (SPLS), Toll Brothers (TOL), Electronic Data Systems (EDS), Garmin Ltd (GRMN)

In the News:

· Wal-Mart Tops Earnings Estimates; But Gives Cautious Outlook

· Hewlett-Packard to Buy EDS for $13.9 Billion

· Average Gas Prices Rise 10 Cents; Set Record at $3.72 a Gallon

· Fed Chief Bernanke Says Financial Turmoil in Markets Easing

· Staples Raises Hostile Bid for Corporate Express

· Toll Brothers Revenue Plunges 30%

· Retail Sales Down Again in April, But Not As Bad As Predicted

· Iowa Meatpacking Plant Raided in ID Theft Investigation

· Microsoft's World Wide Telescope Lets Amateur Astronomers See Cosmos Through Computer

· Older Mom & Pop Gas Pumps Can't Handle $4 Gas

Gas Crunch Hits Home
The record-high price of gasoline is putting a strain on American motorists - and spurring some to shift their habits. Here are their stories.
America's Money: Gas crunch hits home - CNNMoney.com

12 Ways to Make Your House a Cash Cow
Want to earn some extra cash? Turn your home into a money-making machine. As times get tighter, many are looking for ways to save. Here are offbeat ways to bring in cash without leaving home. These include take in renters, have yard sales, throw party sales or share your garage.
12 ways to make your house a cash cow - Bankrate.com

The Best GPS for $300 or Less
Cutthroat competition has made it possible to buy a simple, inexpensive navigation device for your car. Buy the features you need and forget the rest.
The Best GPS for $300 or Less - Kiplinger.com

4 Little-Known Credit Card Perks
Unable to return unwanted or broken items at the store? Try your credit-card issuer.
4 Credit-Card Protections Shoppers Should Know About - SmartMoney

How to Build Your Credit Score Without a Credit Card
It's often said that credit cards are a necessity to get a credit score and have any chance of securing a loan, but there are ways to do it without credit cards at all.
Build Your Credit Score Without a Credit Card - TheStreet.com

Pitfalls of Out-of-Business Sales
It's possible to snag a bargain, but you could get also stuck with a defective item you can't return. And if you have a gift card from a bankrupt store, move quickly.
The Pitfalls of Shopping the Liquidation Sales - SmartMoney.com

Slaying the Boogie Monster
It sounds like the plot for a Footloose sequel: Small-town officials try to shut down a local saloon by wielding an antiquated ban on outdoor dance halls. See how an Arizona saloon owner takes down antiquated dance ban.
Slaying the Boogie Monster - FORTUNE Small Business

Most Overpaid Athletes
Twenty pro players whose dollars don't add up. Looking at their stats over the past three years measured against their salaries show some players are very overpaid. They include Mike Mussina, Johnny Damon, Ichiro Suzuki, Nate Clements, Stephon Marbury and Theo Ratliff to name a few.
America's Most Overpaid Athletes - Forbes.com

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Pre-market movers: EDS, HPQ ...

Douglas McIntyre — 2008-05-13T08:09:00+00:00

Filed under: Before the bell, Hewlett-Packard (HPQ), Electronic Data Systems (EDS)

EDS (NYSE:EDS) is up 2% on news of a takeover by Hewlett-Packard (NYSE:HPQ) with most of the gain coming yesterday afternoon when rumors surfaced.

HP is off 1.2% after a sharp drop near the end of the close yesterday.

Deutsche Telekom (NYSE:DT) is off 3% on continuing rumors that it might buy in to Sprint (NYSE:S).

Hoku Scientific (NASDAQ:HOKU) is off 7% on weak earnings.

Douglas A. McIntyre is an editor at 247walls.com and author of the Ten Stocks Under $10 letter.

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Early analyst calls: SIRI, EDS ...

Douglas McIntyre — 2008-05-13T07:49:00+00:00

Filed under: Before the bell, Analyst upgrades and downgrades, Sirius Satellite Radio (SIRI), Electronic Data Systems (EDS), McGraw-Hill Companies (MHP)

Merrill Lynch upgraded Sirius (NASDAQ: SIRI) to "neutral" from "sell" according to Briefing.com. The news service also reports that Citigroup downgraded EDS (NYSE: EDS) from "outperform" from "market perform".

Goldman Sachs downgraded ITV to "sell" from "neutral," according to MarketWatch.

McGraw-Hill (NYSE: MHP) and Moody's (NYSE: MCO) were both started as "buy" in new coverage at Jefferies, according to 24/7 Wall St.

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Before the bell: Futures lower after WMT earnings, ahead of data

Melly Alazraki — 2008-05-13T07:40:00+00:00

Filed under: Before the bell, Earnings reports, Deals, Hewlett-Packard (HPQ), Wal-Mart (WMT), Market matters, International Business Machines (IBM), Toll Brothers (TOL), Electronic Data Systems (EDS), Economic data, Federal Reserve

U.S. stock futures fell Tuesday morning even after (or perhaps because) Wal-Mart reported a 7% profit rise, slightly above analyst estimates. But investors also awaited several economic indicators due out today as well as speeches from several of the Federal Reserve members.

U.S. stocks finished the day with strong gains Monday thanks to a drop in crude oil futures and several deal speculations that hit the Street. The Dow industrials went up 130 points, or 1.02%, the Nasdaq Composite was up 42 points, or 1.76%, and the S&P 500 finished the day 15 points, or 1.10%, higher.

At 8:30 a.m. EDT April export and import prices as well as retail sales data are due. Economists expect retail sales to have declined 0.2%, and excluding autos, they expect sales to have increased 0.2% in the month. The difference in the two gauges isn't surprising as higher gasoline prices were bound to put consumers off buying cars.
At 10:00 a.m. EDT, March business inventory levels are due.

But other than raw data, seven Fed members are also scheduled to give speeches, including one from Fed Chairman Ben Bernanke in Atlanta on the central bank's liquidity measures.

Oil prices dropped below $124 a barrel Tuesday as trader may have taken profit following the recent records set daily last week and Monday. The dollar, meanwhile, managed to mostly keep its current level.

Corporate news this morning includes, of course, Wal-Mart Stores Inc. (NYSE: WMT) earnings.
The world's largest retailer, reported a 7% rise in quarterly profit. It seems that the current economic climate benefited the giant discount retailers as U.S. shoppers were out in droves looking for bargains even on necessities like food and pharmacy items.

Late Monday we also heard that Hewlett-Packard (NYSE: HPQ) could be near a deal to buy Electronic Data Systems Corp. (NYSE: EDS). Many view this deal as a sign to come in the industry, expecting it to spark a round of consolidation in the technology outsourcing sector around the globe. Just as this move is seen as an attempt by HP to better compete with International Business Machines (NYSE: IBM) in technology services, other deals would be an attempt to keep competitive.

And from the housing sector, luxury home builder Toll Brothers (NYSE: TOL) said its homebuilding revenue likely fell 30% in its fiscal second quarter, and continued to refer to "challenging times" ahead.

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Option Update: Hewlett-Packard calls active; shares sell off on report of EDS talks

Paul Foster — 2008-05-12T16:50:00+00:00

Filed under: Hewlett-Packard (HPQ), Electronic Data Systems (EDS), Options

Hewlett-Packard (NYSE: HPQ) is closed down $2.48 to $46.65.

The WSJ reported HPQ is in advanced talks to acquire Electronic Data Systems (NYSE: EDS) for between $12 billion and $13 billion according to sources.

HPQ call option volume of 59,863 contracts compares to put volume of 21,209 contracts. HPQ June option implied volatility of 35 is near its 26-week average of 33 according to Track Data, suggesting slightly larger price risk.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

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Earnings highlights: Microsoft, Yahoo!, Apple, Amazon, Texas Instruments and others

Trey Thoelcke — 2008-04-26T14:40:00+00:00

Filed under: Earnings reports, Microsoft (MSFT), Yahoo! (YHOO), Apple Inc (AAPL), Amazon.com (AMZN), AT and T (T), Netflix, Inc. (NFLX), QUALCOMM Inc (QCOM), Electronic Data Systems (EDS), Texas Instruments (TXN), Huaneng Power Intl ADS (HNP), EMC Corp (EMC), Broadcom Corp'A' (BRCM), Level 3 Communications (LVLT)

Here are some highlights from this past week's earnings coverage from BloggingStocks:

Amazon.com Inc. (NASDAQ: AMZN) profits rose 30%, easily beating analysts' expectations.
AMETEK Inc. (NYSE: AME) beat Q1 estimates on global strength and recent acquisitions.
Apple Inc. (NASDAQ: AAPL) easily beat Q2 expectations but offered a weak outlook.
AT&T Inc. (NYSE: T) posted strong Q1 results thanks to the popularity of the iPhone.
Baidu.com Inc. (NASDAQ: BIDU) beat earnings and saw an upgrade from Citigroup Inc. (NYSE: C).
Broadcom Corp. (NASDAQ: BRCM) Q1 profit soared, and it raised its guidance.
Cymer Inc. (NASDAQ: CYMI) beat Q1 estimates and announced a share million buyback program.
Electronic Data Systems Inc. (NYSE: EDS) posted Q1 profits on cost cutting and new contracts.
EMC Corp. (NYSE: EMC) Q1 earnings fell on on acquisition-related charges.
Hexcel Corp. (NYSE: HXL) beat Q1 estimates on increased commercial aerospace sales.
Huaneng Power ADS (NYSE: HNP) earnings plunged on coal prices, but the stock went higher.
Level 3 Communications Inc. (NASDAQ: LVLT) narrowed its loss on higher sales of networking services.
McAfee Inc. (NYSE: MFE) Q1 profit plunged on product development and marketing costs.
MEMC Electronic Materials Inc. (NYSE: WFR) missed analysts' estimates for the first quarter.
Microsoft Corp. (NASDAQ: MSFT) beat earnings expectations and raised its full-year guidance.
Netflix Inc. (NASDAQ: NFLX) profit soared in the first quarter on increase in subscriptions.
Nintendo Co. (OTC: NTDOY) posted record results due to the popularity of the Wii system.

optionsXpress Holdings Inc. (NASDAQ: OXPS) reported solid results in the first quarter.
Qualcomm Inc. (NASDAQ: QCOM) reported mixed results for the second quarter but raised its guidance.
Texas Instruments Inc. (NYSE: TXN) Q1 earnings rose 40%, in line with analysts' expectations.
VMware Inc. (NASDAQ: VMW) posted strong earnings and offered a positive outlook.
Vocus Inc. (NASDAQ: VOCS) reported its 35th consecutive quarter of revenue growth.
Yahoo! Inc. (NASDAQ: YHOO) beat Q1 estimates, helping it to face Microsoft.

Also, Jim Cramer discusses "crummy lenders" and Sheldon Liber takes a closer look at Amazon.com's results. Joseph Lazzaro considers Citigroup Inc. (NYSE: C) as a barometer of the economy. One analyst thinks financials may have hit bottom and it may be time to buy, and Jon Ogg looks at what short sellers are making of tech stocks. Ted Allrich discusses what to sell/what to buy.

Upcoming results to watch for include Verizon Communications (NYSE: VZ), Tyson Foods (NYSE: TSN), CBS Corp. (NYSE: CBS), Countrywide Financial (NYSE: CFC), U.S. Steel Corp. (NYSE: X), Office Depot (NYSE: ODP), General Motors (NYSE: GM), Procter & Gamble (NYSE: PG), Kraft Foods (NYSE: KFT), Starbucks (NASDAQ: SBUX), Time Warner (NYSE: TWX), Comcast (NASDAQ: CMCSA), Exxon Mobil (NYSE: XOM), and Chevron (NYSE: CVX).

Visit AOL Money & Finance for more earnings coverage.

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International Business Machines (IBM): Shares cycling in bullish 'flag'

Larry Schutts — 2008-03-10T12:12:00+00:00

Filed under: Good news, Microsoft (MSFT), Hewlett-Packard (HPQ), International Business Machines (IBM), Electronic Data Systems (EDS), Technical Analysis, Stocks to Buy

International Business Machines Corporation (NYSE: IBM) is a top provider of information technologies, including computer systems, networking systems and storage devices. It is also one of the largest providers of software and semiconductors and its service arm is the largest in the world. Competitors include Hewlett-Packard (NYSE: HPQ), Microsoft (NASDAQ: MSFT) and Electronic Data Systems (NYSE: EDS).

The company pleased investors late last month, when it authorized $15 billion in additional funds for use in the IBM stock repurchase program. That amount was in addition to about $400 million remaining from a prior authorization. Management said that the anticipated repurchase activity could add five cents per share to FY08 earnings and that led to declaration of FY08 EPS guidance of at least $8.25 ($8.22 consensus).

The stock price popped on the news and has since been consolidating the gain in a bullish "flag" pattern. Stocks frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Brokers recommend the issue with five "strong buys", seven "buys" and seven "holds". Analysts expect a 13% growth rate, through the next year. The IBM P/E ratio (15.75), Price to Sales ratio (1.60), Price to Cash Flow ratio (10.10), Price to Free Cash Flow ratio (18.70), EPS Growth rate (27.27%), Return on Assets (9.31%), Return on Investment (14.96%) and Return on Equity (36.57%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 63% of the outstanding shares. The stock is one of those used to calculate the Dow Jones Composite and the Dow Jones Industrial Average. Over the past 52 weeks, it has traded between $92.10 and $121.46. A stop-loss of $100.00 looks good here. Note the the firm is expected to report Q1 earnings in mid-April.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.

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Perot Systems (PER): Shares cycle in bullish 'pennant' formation

Larry Schutts — 2008-02-26T12:37:00+00:00

Filed under: Earnings reports, International Business Machines (IBM), Electronic Data Systems (EDS), Technical Analysis, Stocks to Buy

Perot Systems Corporation (NYSE: PER) offers information technology, business process outsourcing and strategic consulting services through its operations in the US, Mexico, Europe and India. Offerings include applications development, systems integration, claims processing, call center operations, enterprise analysis and research. The company serves clients in banking, insurance, healthcare, manufacturing, telecommunications, travel, energy and defense. Electronic Data Systems (NYSE: EDS) and IBM (NYSE: IBM) are major competitors.

The firm pleased investors earlier in the month, when it reported Q4 EPS of 35 cents and revenues of $732 million. Analysts had been looking for 30 cents and $707.9 million. The CEO attributed the solid results to new business, globally-delivered projects and existing client expansion. Management also guided Q1 EPS to 21-23 cents (21 cent consensus) and Q1 revenues to $665-$680 million ($673.52M consensus).

The share price popped on the news and has since been defining a bullish "pennant" consolidation pattern. Stocks frequently exit pennants moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Brokers recommend the issue with one "strong buy", two "buys" and seven "holds". The PER P/E ratio (15.41), Price to Sales ratio (0.67), Price to Book ratio (1.41), Price to Cash Flow ratio (8.02) and EPS Growth rate (36.39%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 69% of the outstanding shares. Over the past 52 weeks, the stock has traded between $11.10 and $18.70. A stop-loss of $12.10 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.

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Earnings highlights: Time Warner, Cisco, Gannett, Disney, EDS and others

Trey Thoelcke — 2008-02-09T09:40:00+00:00

Filed under: Earnings reports, Cisco Systems (CSCO), Time Warner (TWX), Walt Disney (DIS), Avon Products (AVP), Gannett Co (GCI), Electronic Data Systems (EDS), Activision Inc (ATVI), Old Dominion Freight Line (ODFL), Las Vegas Sands (LVS), Unilever ADR (UL)

The earnings crunch rolls on, and here are a few of the highlights of this past week's earnings coverage from BloggingStocks:

Activision Inc. (NASDAQ: ATVI) earnings soared on popularity of Guitar Hero and other game franchises.
Arch Coal Inc. (NYSE: ACI) beat earnings expectations and offered revised guidance.
Avon Products Inc. (NYSE: AVP) beat estimates despite lower profits due to restructuring costs.
Chattem Inc. (NASDAQ: CHTT) beat estimates and raised its guidance.
Cisco Systems Inc. (NASDAQ: CSCO) met estimates but a weak forecast raised concerns.
Dionex Corp. (NASDAQ: DNEX) beat estimates on strength in petrochemical and food/beverage markets.
Electronic Data Systems Corp. (NYSE: EDS) earnings fell, helping to raise concerns about tech stocks.
Flextronics International Ltd. (NASDAQ: FLEX) beat estimates and affirmed its outlook.
Gannett Inc. (NYSE: GCI) missed fourth-quarter earnings estimates on lower ad revenue.
Las Vegas Sands Corp. (NYSE: LVS) missed expectations due to rising construction costs.
MGM Mirage (NYSE: MGM) forecast it would beat earnings expectations by as much as 10 cents a share.
Old Dominion Freight Line Inc. (NASDAQ: ODFL) beat revenue estimates and raised its guidance.
RealNetworks Inc. (NASDAQ: RNWK) warned it would miss first-quarter and full-year expectations.
Silicon Laboratories (NASDAQ: SLAB) beat expectations and raised its guidance.
THQ Inc. (NASDAQ: THQI) posted disappointing results that included cancelled game franchises.
Time Warner Inc. (NYSE: TWX) met estimates and announced restructuring plans (see transcript).
Unilever (NYSE: UL) fourth-quarter net income tanked on a sell-off of its European frozen food business.
Walt Disney Co. (NYSE: DIS) posted better-than-expected results on gains in TV and theme parks.

For additional earnings highlights from this past week, see Earnings highlights: PepsiCo, Toyota, News Corp., ADM, Toll Bros. and others.

Also, Doug McIntyre suspects analysts are expecting too much from earnings in the later half of the year. And Zac Bissonette is skeptical about claims of "record earnings."

Upcoming results to watch for include General Motors Corp. (NYSE: GM), Applied Materials Inc. (NASDAQ: AMAT), Coca-Cola Co. (NYSE: KO), Deere & Co. (NYSE: DE), and Comcast Corp. (NASDAQ: CMCSA).

Visit AOL Money & Finance for more earnings coverage.

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Cisco and EDS: Tech gets dressed down

Douglas McIntyre — 2008-02-07T08:00:00+00:00

Filed under: Earnings reports, Industry, Cisco Systems (CSCO), Electronic Data Systems (EDS)

Cisco's (NASDAQ: CSCO) numbers were OK. The company reported net income of $2.1 billion, or 33 cents per share, compared with $1.9 billion, or 31 cents, for the same period a year earlier. But the forecast was soft by Wall Street standards, and shares fell 8% after hours.

Over at big tech out-sourcing company EDS (NYSE: EDS), earnings fell 13% to 36 cents a shares, according to MarketWatch.

The message to the markets was clear. Both in enterprise tech consulting and enterprise tech sales the road ahead is filled with pot holes. The first half of 2008 is a period when a slowing economy is going to swallow up almost the entire technology sector. After that, no one knows.

There was some optimism on Wall Street that tech might escape a downturn because large corporations would not cut capital expenditures on large projects in their advanced data centers. Telecoms and cable companies would not slow build-outs of routers to improve their broadband capacity.

All of that thinking was a victory of hope over reason. Big tech is in for trouble.

Douglas A. McIntyre is an editor at 247wallst.com.

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