Markets & Finance

Red Hat Shares Gain


Red Hat (RHAT) shares rose Thursday after the company posted 9 cents vs. 6 cents second quarter earnings per share on a 42% revenue rise. S&P reiterated its hold on the stock, while UBS Financial and ST Robinson Humphrey upgraded it to buy.

E*TRADE Financial (ET) plans to acquire online brokerage service BrownCo from JP Morgan Chase (JPM) for $1.6 billion cash. The company expects its acquisition after integration to be accretive to earnings per share by 7 cents on a full-year run basis. JP Morgan expects to recognize $700 million of after-tax gain on the deal, which is slated to close by the end of this year.

The Wall Street Journal reported a probe of Fannie Mae(FNM) has found new accounting violations, including evidence that the company may have overvalued assets. S&P cut its target, and reiterated its hold on the stock.

IDX Systems (IDXC) Agreed to be acquired by GE Healthcare, a unit of General Electric(GE), in a $1.2 billion deal at $44 cash per IDX share.

American Greetings (AM) posted 5 cents vs 10 cents second quarter earnings per share vs. 10 cents second quarter earnings per share on 1.1% lower revenue. The company cited weakness in international operations and expects between 70 cents and 75 cents third quarter earnings per share.

PepsiCo (PEP) posted 51 cents vs. 79 cents third quarter earnings per share despite a 13% revenue rise. The company noted that third quarter 2005 includes a 27 cents earnings per share charge, and third quarter 2004 includes 13 cents of tax benefit; excluding items, third quarter 2005 earnings per share were 78 cents. Excluding items, the company sees $2.64 to $2.65 2005 earnings per share.

Cooper Tire & Rubber (CTB) said two of its tire manufacturing facilities will operate on reduced schedules due to raw material shortages caused by hurricanes.

Ballard Power Systems (BLDP) inked a deal with Japanese partner Ebara, their jointly-owned Ebara Ballard, to provide about $30 million in funding over the next four years for the next generation of cogeneration fuel cell stack and system technology.

McAfee (MFE) reserved $50 million in connection with the potential settlement of a Securities and Exchange Commission probe that had begun in March 2002 into its 2000 results and prior periods.

Metretek Technologies (MEK) Due to effects of hurricanes on its Southern Flow unit, expects 2005 net income will be reduced by as much as $600,000. The company cut its 2005 net income from continuing operations estimate from $3 million to $2.4 million, or 19 cents per basic share.

Time Warner (TWX) said it expects a hearing will commence in October, followed by creditor balloting and a confirmation hearing to approve the final/third amended reorganization plan for bankrupt Adelphia, which it will acquire with Comcast (CMCSA) for $12.7 billion.

Red Hat (RHAT) posted 9 cents vs. 6 cents second quarter earnings per share on a 42% revenue rise. S&P reiterated its hold on the stock, while UBS Financial and ST Robinson Humphrey upgraded it to buy.

AMERIGROUP (AGP) said it sees 6 cents to 8 cents third quarter loss in earnings per share. The company said its third quarter results will include additional estimated medical costs related to services performed in prior periods. CS First Boston downgraded the stock to neutral and cut its target to $18.

Research In Motion (RIMM) posted lower-than-expected 56 cents vs. 36 cents second quarter earnings per share (GAAP) on a 58% revenue rise. The company sees 62 cents to 68 cents third quarter earnings per share and 74 cents to 81 cents fourth quarter earnings per share. S&P kept its hold on the stock, while Deutsche Bank downgraded it to sell from hold.

Delphi (DPH) shares fell after the Wall Street Journal reported that Ford (F) plans to overhaul its purchasing process to offer larger and long-term contracts to a smaller group of suppliers.

Emmis Communications (EMMS) posted 15 cents vs. 23 cents second quarter earnings per share (GAAP) as higher expenses offset an 11% revenue rise.

Honda Motor (HMC) said Moody's Investors Service raised its outlook to positive from stable on A1 senior unsecured, issuer ratings of company, and its supported subsidiaries.

Actuant (ATU) posted 63 cents vs. 28 cents fourth quarter earnings per share from continuing operations on a 43% sales rise. The company sees 62 cents to 67 cents first quarter earnings per share on $270 million to 280 million revenue, and $2.75 to $3.00 fiscal year 2006 earnings per share on $1.15 billion to $1.175 billion revenue.

Home Solutions of America (HOM) raised its 2005 earnings per share guidance to 23 cents to 25 cents, earnings before interest taxes depreciation and amortization to between $11 million and $12 million, and revenue to between $70 million and $75 million. The company cited a significant increase in hurricane-related work in the Gulf Coast region, and acquisition of assets from Florida Environmental Remediation Services.

The TriZetto Group (TZIX) said it received a letter from the Securities and Exchange Commission asking the company to comment on some of its accounting practices in its 2004 annual report.

CRA International (CRAI)posted 66 cents vs. 52 cents third quarter earnings per share on a 25% revenue rise. The company sees its 2005 revenue growth at the low end of the 35% to 40% range. Taking into account a June stock offering, it sees 2005 earnings per share growth of 32% to 40%.

Tractor Supply (TSCO) reported 4.2% higher 2005 same-store sales through September 24. Wedbush Morgan, saying results are weaker than expected, cut its estimates and price target.

Forest Labs (FRX) and Cypress Bioscience (CYPB) reported that preliminary results from the study of milnacipran showed their new medical treatment as ineffective. Morgan Stanley cut its opinion on Forest Labs to equal-weight, while Thomas Weisel cut it to peer perform.

Jefferies downgraded Cypress stock to underperform from buy.

Cantel Medical (CMN) posted 29 cents vs. 20 cents fourth quarter earnings per share on a 15% sales rise.

Critical Therapeutics (CRTX) received Food and Drug Administration approval to manufacture and market the asthma drug Zyflo in the United States.

August Technology (AUGT) said it will restate the timing of revenue recognized from transactions with one customer. It will restate financials for annual and quarterly periods in 2004, as well as the first quarter and second quarter of 2005, to reduce net revenues in those periods by an aggregate of $12.2 million.


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