Analyst Actions: Alcoa, Microchip Technology, Polycom

From Standard & Poor's Equity Research

UBS MAINTAINS NEUTRAL ON ALCOA

UBS analyst Brian MacArthur says Alcoa (AA) is curtailing 135,000 metric tons per year of aluminium production, selling four non-core downstream businesses, cutting 13,500 jobs, taking a fourth quarter charge of $900-$950 million due to the restructuring.

On a positive note, Alcoa is cutting operating costs by about $150 million a year and has finalized power agreements in Quebec through 2040. MacArthur revises his 2009/2010 EPS forecasts from $0.06/$0.76 to $0.16/$0.90 to reflect the restructuring and lower costs.

He raises his $10.50 price target to $11.50.

PACIFIC CREST CUTS ESTIMATES FOR MICROCHIP TECHNOLOGY

Pacific Crest analyst Ruben Roy says challenging economic conditions persist and Microchip Technology's (MCHP) negative preannouncement was widely expected.

Roy believes that the competitive landscape will continue to become more challenging. He sees high inventory forcing lower utilization, adversely affecting fiscal year 2010 (March) gross margin. He believes as economic situation improves, MCHP's operating leverage will likely lag those of peers.

He cuts $1.44 fiscal year 2009 EPS estimate to $1.14 and $1.21 for fiscal year 2010 to $0.70. He maintains sector perform rating.

WEDBUSH MORGAN RAISES TARGET FOR POLYCOM

Wedbush Morgan analyst Scott Sutherland says Polycom's (PLCM) fourth quarter guidance a mixed bag: PLCM sees $263-$265 million revenue, below his $273 million view, but PLCM sees $0.39-$0.41, above his $0.36 view. He notes that the lower revenue is due to a slight sequential drop in the Video segment, coupled with continued weakness in the Voice segment, but cost management led to EPS upside.

Sutherland says PLCM also announced a restructuring plan with immediate 6% workforce cut.

As a result of the company's fourth quarter guidance, he now sees $265,000 revenue and $0.41 EPS. He maintains a hold rating, but raises his $14 target price to $16.