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Stocks to Watch: Apple, Ford, IBM, McDonald's, Merck, Rite Aid


Shine on Brightly


Stocks to watch for Thursday, August 24

  • Apple (AAPL) agreed to pay $100 million to settle a legal dispute with Singapore's Creative Technology (CREAF) over patents covering digital-music players.
  • ArthroCare (ARTC) said the Securities and Exchange Commission has requested documents and information about its stock option grant practices. Prior to receiving the request, ArthroCare said it began an internal review of all of its equity compensation activities from the time of its initial public offering in February 1996 to present. Based on the results, the company said it believes there have been no unusual patterns in the timing or pricing of its equity awards, and there is specifically no evidence of backdating of option awards.
  • AT&T (T) filed a lawsuit that seeks to identify 25 data brokers it claims fraudulently obtained phone-calling records for abut 2,500 customers.
  • Chico's FAS (CHS) warned investors that earnings would be significantly pressured until 2007 by investments in new stores and merchandising.
  • Chrysler (DCX) said it is sticking to a plan to cut output due to rising inventory of SUVs and pickups.
  • Coldwater Creek (CWTR) reported second-quarter net earnings of $12 million, or 13 cents a share, up from $6.2 million, or 7 cents a share, during the year-ago period. The Sandpoint, Idaho-based women's apparel retailer company posted revenue of $216.4 million vs. $153.3 million.
  • Convera (CNVR) reported a second-quarter net loss of $11.1 million, or 21 cents a share, compared with a net loss of $25,000, or breakeven on a per-share basis, in the year-ago period. Revenue fell 58% to $3.31 million from $7.8 million.
  • Ford Motor (F) said its Ford, Lincoln and Mercury brands will offer zero-percent financing in a bid to clear out inventory before the arrival of 2007 vehicles.
  • Gateway (GTW) received an unsolicited $450 million bid for its retail business from eMachines' co-founder Lap Shun Hui. Shares surged 13%.
  • IBM agreed to pay $1.3 billion for ISS, a maker of security software and equipment, as it seeks to bolster its technology services.
  • McDonald's (MCD) said Mike Roberts, president and chief operating officer, has resigned. The Oak Brook, Ill.-based fast-food giant said it has named Ralph Alvarez, currently president of McDonald's North America, to succeed Roberts. The company said Don Thompson, who serves as executive vice president and COO of McDonald's USA, has been appointed president
  • Merck (MRK) released preliminary data suggesting a possible Vioxx replacement may not have any more heart risks than an older drug. The company, however, also flagged some potential worries for the drug.
  • Michaels Stores (MIK) reported second-quarter net earnings of $20.3 million, or 15 cents a share, vs. $16.5 million, or 12 cents a share, in the same period last year. Revenue at the Irving, Texas, arts and crafts retail chain rose to $768.3 million from $745.5 million, while sales at stores open at least a year fell 0.3%, hurt by ongoing programs to reduce the level of promotional and clearance sales. Michael's said it now expects third-quarter same-store sales to increase 1% to 3% over the same period last year, with total sales up between 4% and 6%. The company forecast earnings for the period of 22 cent a share.
  • Mills (MLS) received warnings from its auditor as early as 2002 that its accounting practices were flawed, according to a lawsuit filed by the REIT's former CEO.
  • Nordson (NDSN) reported fiscal third-quarter net earnings of $24.8 million, or 72 cents a share, up 34% from $18.6 million, or 50 cents a share, in the year-ago period. Revenue at the Westlake, Ohio-based maker of dispensing equipment rose to $226 million from $201.6 million. Nordson said it expects fiscal fourth-quarter sales to be relatively flat compared with last year, due in part to a deceleration in order growth.
  • Oracle's (ORCL) senior vice president of global finance and operations and chief accounting officer plans to step down effective Oct. 11, according to a filing with the Securities and Exchange Commission late Wednesday. Jennifer Minton will step down following the filing of the company's first-quarter Form 10-Q, and will retire on Nov. 30 after 17 years with Oracle, the company said. Her resignation is not related to any disagreement with senior management or with the Oracle's accounting or operating policies, the company said. The Redwood Shores, Calif.-based database and business-software giant said it has begun a search for Minton's successor.
  • Parlux Fragrances (PARL) said it has received a delisting notice from Nasdaq following the delay in filing its Form 10-Q for the period ended June 30, 2006. The company also said it plans to request a hearing before the Nasdaq listing qualifications panel to review the matter. Parlux had previously announced it would delay filing the 10-Q pending the determination of a non-cash charge related to share-based payment.
  • Phillips-Van Heusen (PVH) reported second-quarter net earnings of $29 million, or 33 cents a share, up 23% from $23.5 million, or 16 cents a share, during the year-ago period. The New York clothing company posted revenue of $458.9 million vs. $443.5 million. Pro forma earnings were 53 cents a share for the quarter. Phillips-Van Heusen said it expects third-quarter earnings of 80 cents to 82 cents a share on revenue of $560 million to $565 million. For 2006, the company said it expects per-share earnings of $2.46 to $2.50 on revenue of $2 billion to $2.01 billion.
  • Realogy (H) lowered its 2006 revenue outlook, and said it expects net earnings of $250 million to $340 million, or $1.03 to $1.43 a share. After giving effect to a planned 48 million-share buyback program and excluding items, the company expects earnings of $345 million to $415 million, or $1.42 to $1.75 per share. Realogy cut its revenue forecast to a range of $6.4 billion to $6.7 billion. The real estate franchisor also said it has authorized the repurchase of up to 48 million shares of its common stock, or around 19% of its 250 million shares outstanding.
  • Rite Aid (RAD) is close to a deal to acquire the Eckerd and Brooks drugstore chain from Jean Coutu Group in a cash-and-stock deal valued at $3.4 billion, according to a published report. Rite Aid would pay about $1.8 billion in cash for the stores, said The Wall Street Journal's online edition, citing two people familiar with the deal. The transaction would add roughly 1,800 stores to Rite Aid's 3,200 outlets.
  • Thermo Electron (TMO) and Fisher Scientific International (FSH) said they have received a request for additional information from the Federal Trade Commission in connection with their pending merger. The second request is limited to information concerning a single, minor product line, the companies said. Thermo and Fisher said they expect to resolve issues raised by the request by agreeing to divest a $17 million product line of Fisher's. In May, Thermo agreed to acquire the Fisher in an all-stock deal valued at about $10.6 billion, creating a massive supplier of scientific and lab equipment from test tubes to DNA-analysis tools. The companies continue to expect the transaction to close in the fourth quarter.
  • VNU hired GE Vice Chairman David Calhoun to run the Dutch media firm, offering the executive a compensation package valued at at least $100 million.
  • Weyerhaeuser (WY) is splitting off its fine-paper business into a new company that will then combine with Canada's Domtar.

Market Update

  • Asian trading closed with the Hang Seng -1.20%, Nikkei -1.25%, Sensex +1.10%, Taiwan -0.09% and Shanghai +0.66%.
  • A check of the European bourses finds the CAC +0.55%, DAX +0.68%, FTSE +0.21%, ATX -0.32% and Stockholm flat.
  • Crude oil is trading -0.10 to 71.66 while gold is +0.9 to 633.9 this morning.
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