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Stocks To Watch: Ceridian, Costco, IBM, Morgan Stanley, TiVo

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Today's big stories and some stocks with potential to move...

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Stocks to watch for Thursday, May 31:

  • Applebee's International (APPB) system-wide U.S. comparable sales fell 2.1% in May. Comparable-store sales for company restaurants fell 2.9% in May, while comparable sales for U.S. franchise restaurants dropped 1.9%. The company said customer traffic dropped 3% to 3.5%, but the average check rose as menu prices rose 1.5%.
  • Ceridian (CEN) agreed to a $5.3 billion buyout by Thomas H. Lee and insurer FNF that could end a feud with an activist investor.
  • Chico's FAS (CHS) reported first-quarter net earnings of $47.2 million, or 27 cents a share, down 10% from $52.5 million, or 29 cents a share, during the year-ago period. The apparel retailer said revenue for the 13 weeks ended May 5 rose to $453.1 million from $390.7 million in the comparable period last year, while same-store sales at company-owned stores fell 1.6%. Analysts polled by Thomson Financial had forecast, on average, a per-share profit of 26 cents on revenue of $457 million.
  • Computer Sciences (CSC) said it has found "significant errors" in its accounting for tax liabilities in fiscal years 2000 through 2006, and has delayed filing its 2007 annual report on Form 10-K. The company said it estimates that the correction of the errors will result in a cumulative charge of $300 million to $400 million through March 31, 2006. The amount doesn't include the cumulative charge of $60 million through March 31, 2006, related to the stock-option investigation, which was previously disclosed and recorded, the company said. CSC also said that financial statements included in its previously filed annual report on Form 10-K for the year ended March 31, 2006, should not longer be relied upon. The company said it will restate prior periods in its Form 10-K for the year ended March 30, 2007, which it currently expects to file on or prior to June 13.
  • Costco's (COST) net income fell 4.9%, as the No. 1 warehouse retailer continued to face pressure after tightening a return policy on electronics.
  • eBay (EBAY) said it has acquired StumbleUpon, a company that helps people discover and share content online, for roughly $75 million. StumbleUpon's 2.3 million users deliver roughly 5 million new recommendations a day about Web sites, videos, photos and other content eBay said. San Francisco-based StumbleUpon's current founders and management team will remain in place, and eBay said it does not expect the deal to have a material impact on its financial forecast.
  • Great Atlantic & Pacific Tea (GAP) said it is in advanced negotiations with a number of buyers for its 21 Sav-A-Center stores based in Louisiana. A&P said it is "optimistic" that the Sav-A-Center operations can be sold to a single buyer "committed to the continuity of the business." The company said its decision to sell the stores is consistent with its strategy to focus resources on the development and expansion of its core Northeast operations.
  • IBM (IBM) laid off 1,570 workers, bringing its total so far this year to 3,720, as the company continues to overhaul operations in its giant technology services unit.
  • Jo-Ann Stores (JAS) fiscal first-quarter loss narrowed to $1.7 million, or 7 cents a share, from a year-earlier loss of $6.6 million, or 28 cents a share. The fabric and crafts retailer said revenue for the quarter ended May 5 fell slightly to $424.2 million from $424.7 million, as same-store sales increased 1.8%. On average, analysts polled by
  • Morgan Stanley (MS) agreed to pay $3.9 billion for Investa Property Group of Australia, continuing its global real-estate buying spree with the biggest overseas acquisition of an Australian property company ever.
  • Motorola (MOT) said its independent inspector of election results confirmed all board nominees were elected by shareholders during the annual meeting. The company said John A. White received 931.7 million votes, while Carl C. Icahn received about 717.1 million votes. All remaining nominees were re-elected. Motorola said shareholders representing 1,676,089,963 shares, or 70.3%, of common stock, either voted by proxy or in person at the meeting.
  • News Corp.'s (NWS) Fox News named Brian Jones senior vice president of operations for its Fox Business Channel. The company said most recently, Jones was vice president of news for Fox News Channel.
  • Novell (NOVL) reported a second-quarter net loss of $2.19 million. During the same period a year ago, net earnings were $3.34 million. The software company posted earnings available to common shareholders of $2.19 million, or a penny a share. A year ago, the loss available to common shareholders was $3.18 million, or a penny a share. There were 346.5 million shares outstanding during the quarter compared with 385.3 million last year. Revenue rose to $239.2 million from $233.1 million last year.
  • Palm (PALM) launched a new laptop-style device that will act as a companion to smart phones. The Foleo will allow smart-phone users to work on their email and attachments and browse the Web.
  • Payless ShoeSource's (PSS) first-quarter net income rose 8% to $38.9 million, or 59 cents a share, from $36 million, or 53 cents a share, a year earlier on a same-store sales increase 5%. Earnings include pretax costs of $6.1 million, or 6 cents a share, related to its distribution center initiative, the shoe retailer said. Sales for the quarter ended May 5 increased 4.9% to $728.6 million from $694.8 million.
  • TiVo (TIVO) reported first-quarter net earnings of $835,000, or a penny a share. During the same period a year ago, the maker of digital video recorders posted a net loss of $10.7 million or 13 cents a share. Adjusted earnings before interest, taxes, depreciation and amortization were $6.7 million. A year ago, the adjusted loss was $6.9 million. Net revenues for the three months ended April 30 rose to $60.4 million from $56.8 million. Analysts, on average, had forecast per-share loss of 2 cents on revenue of $58 million.
  • Yahoo (YHOO) said that Chief Technology Officer Farzad Nazem is resigning, effective June 8. According to a regulatory filing, the company will pay Nazem a lump sum payment equal to his base salary for the period from his resignation date through the end of the year.
  • ValueClick (VCLK) said it has appointed Tom Vadnais as chief executive, succeeding James Zarley. Vadnais most recently served as president of U.S. operations and has been a member of the board since October 2001. The online marketing services company said that Zarley has been named executive chairman of the board.
  • Wachovia (WB) agreed to acquire A.G. Edwards in a $6.8 billion deal that will create the second-largest retail brokerage firm in the U.S., with $1.1 trillion in client assets


Market Update:

  • Asian trading closed with the Hang Seng +1.68%, Nikkei +1.63%, Sensex +0.92%, Taiwan -0.03% and Shanghai +1.40%.
  • A quick look across the pond finds the CAC +0.73%, DAX +1.32%, FTSE +0.54%, ATX +1.24%, Swiss Mkt. +0.83% and Stockholm +1.41%.
  • Crude oil is trading -0.30 to 63.19 while gold is +3.2 to 662.5 this morning.
No positions in stocks mentioned.

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