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Stocks To Watch: Dell, J.C. Penney, Red Hat, Take Two, United Technology


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


Stocks to watch for Friday, March 30:

  • Airgas (ARG) said it has agreed to acquire a significant part of Linde AG's U.S. packaged gas business for $310 million in cash. The deal will be financed under its revolving credit facility, Airgas said. The acquired business had 2006 revenue of $346 million, and includes 130 locations in 18 states and more than 1,400 employees. The company expects the deal to add up to 2 cents a share to earnings in the first year after the transaction closes. The acquisition does not include Linde's LifeGas medical gas business, its Spectra Gas rare and specialty gas business, its Caribbean and Canadian gases business, and certain other assets. Upon closing, Airgas plans to sell 17 of the acquired packaged gas facilities in the Carolinas, southern Virginia, and eastern Georgia to National Welders Supply Company Inc., a joint venture between Airgas and the Turner family of Charlotte, N.C.
  • Cognos (COGN) reported fourth-quarter net earnings of $60.9 million, or 67 cents a share, up from $39.3 million, or 43 cents a share, during the same period a year ago. The business-software maker posted total revenue of $284.5 million vs. $253.1 million. Excluding amortization of acquisition-related intangible assets and stock-based compensation expense, earnings were 74 cents a share, compared with 49 cents a share last year. Analysts polled by Thomson Financial had forecast fourth-quarter earnings of 65 cents a share on revenue of $278 million. Additionally, Cognos said it expects first-quarter per-share earnings of 19 cents to 24 cents, or 28 cents to 33 cents on a pro forma basis, on revenue of $230 million to $240 million. For fiscal 2008, the company said it sees per-share earnings of $1.66 to $1.73, or $1.98 to $2.05 on a pro forma basis, on revenue of $1.055 billion to $1.075 billion.
  • Dell (DELL) found evidence of misconduct following an internal probe of its accounting practices. The PC maker stressed that the inquiry isn't complete and said it will delay filing its annual report.
  • Dollar Tree Stores (DLTR) said it has entered into an agreement with Goldman Sachs (GS) to buy back about $150 million of its shares under an accelerated share repurchase program. The discount retailer said it will acquire the shares under the $500 million share buyback program announced on Nov. 21, 2006.
  • DSW's (DSW) fiscal fourth-quarter net income rose 65% to $16.6 million, or 37 cents a share, from $10 million, or 23 cents a share, a year earlier. The footwear specialty retailer's net sales for the 14 weeks ended Feb. 3 rose 16% to $329.1 million from $283.8 million in the 13 weeks ended Jan. 28, 2006.
  • Employers Holdings (EIG) reported fourth-quarter net earnings of $55.1 million, down from $74.5 million during the year-ago period. The insurance company posted total revenue of $161 million vs. $125.5 million. Net premiums written were $87.7 million, compared with $103.4 million last year. Employers Holdings had its initial public offering in January.
  • Finish Line's (FINL) fiscal fourth-quarter net income fell 25% to $21.1 million, or 44 cents a share, from $28.1 million, or 58 cents a share, a year earlier. Revenue for the period ended March 3 rose 7.5% to $429 million from $399.2 million. Analysts polled by Thomson Financial, on average, estimated fourth-quarter earnings of 51 cents a share on revenue of $428 million. The Indianapolis retailer said it expects a challenging short-term environment for specialty athletic retailing but is confident in its long-term growth. Finish Line added that the company is positioned for improvement in the fiscal year 2008.
  • Gander Mountain's (GMTN) fourth-quarter net income fell to $15.3 million, or 85 cents a share, from a year-earlier profit of $22.2 million, or $1.45 a share. Income for the recent period ended Feb. 3 included a charge of $9 million, or 50 cents a share, for converting debt to securities. The sporting-goods retailer's sales grew more than 16% to $326.9 million, from $280.8 million a year earlier, while same-store sales increased 0.4%.
  • ICT Group (ICTG), citing significantly higher training and staffing costs, slashed its first-quarter earnings guidance to between 2 cents and 4 cents a share from 20 cents to 23 cents a share. The outsourcing services company also said it now expects revenue at $115 million, down from its previous outlook of $116 million to $118 million. Analysts, on average, predict first quarter earnings at 21 cents a share on revenue of $117 million. ICT said the revision was primarily caused by capacity-related issues with two clients, both of whom are serviced exclusively from North American customer care centers.
  • IDT (IDT) said it has named Stephen Brown as chief financial officer and treasurer, effective immediately. Brown, who served as IDT's CFO from 1995 through May 2006, succeeds Marcelo Fischer.
  • J.C. Penney (JCP) said it has approved a $400 million share buyback. The retailer said it expects to complete the repurchase program by the end of fiscal 2007. Additionally, J.C. Penney said it has increased its quarterly dividend 11% to 20 cents a share. The dividend is payable on May 1 to shareholders of record as of April 10.
  • LCC International (LCCI) said it will delay the filing of its 2006 Form 10-K with the Securities and Exchange Commission. The provider of voice and data design and deployment services said the company and its auditors need additional time to complete their assessment of the effectiveness of LCC's internal controls over financial reporting. LCC said it expects to complete the steps necessary to file the Form 10-K by no later than April 30, the deadline by which the company is required to provide audited financial statements to its lender.
  • McDermott International (MDR) named Michael S. Taff senior vice president and chief financial officer, effective Sunday. The Houston engineering and construction company said Taff, 44, joined McDermott in June as vice president and chief accounting officer. He replaces Francis S. Kalman, 59, as chief financial officer. Kalman will continue as executive vice president until Sept. 30.
  • PMC-Sierra (PMCS) expects to cut ongoing annualized operating expenses by about $20 million to $24 million a year. The provider of broadband communications and storage semiconductors intends to close two R&D centers in Winnipeg, Manitoba, and Saskatoon, Saskatchewan. The restructuring, which is part of PMC-Sierra's strategy to improve its corporate operating performance, will eliminate about 175 positions across the organization, the company said. PMC-Sierra expects the restructuring, which will begin immediately and is expected to be substantially complete by the end of the third quarter, to incur about $12 million to $14 million in costs and charges.
  • Red Hat (RHT) said its fiscal fourth quarter profit fell 25%, while revenue grew 41%. Red Hat distributes and services a version of Linux open source software for servers. The company said net income for the quarter ended Feb. 28 fell to $21.47 million, or 10 cents a share, from $28.74 million, or 13 cents a share during the period a year earlier. Meanwhile revenue grew to $111.1 million from $78.7 million. Red Hat said that excluding certain items, earnings were 15 cents a share for the quarter. Analyst surveyed by Thomson Financial had expected earnings of 15 cents a share, on $113 million in revenue. Red Hat said subscription revenue for the quarter grew 44% from the period a year ago to $95.9 million.
  • Saba Software's (SABA) fiscal third-quarter net loss narrowed to $1.24 million, or 4 cents a share, from a year-earlier loss of $1.94 million, or 9 cents a share. The human resources software company's revenue increased 36% to $24.9 million for the period ended Feb. 28, from $18.2 million a year earlier. Excluding amortization of acquired technology, stock compensation and other items, income for the recent period was $534,000, or 1 cent a share, compared with $478,000, or 2 cents a share, in the year-earlier period.
  • Solectron (SLR) reported fiscal second-quarter net earnings of $15.3 million, or 2 cents a share, down from $30.4 million, or 3 cents a share, in the year-ago period. Excluding items, the company reported a profit of $41 million, or 5 cents a share, compared with $29.7 million, or 3 cents a share a share, last year. The provider of electronics manufacturing and supply chain services said revenue in the quarter ended March. 2 rose 16% to $2.9 billion from $2.5 billion in the same period last year. Solectron also said it is beginning the next phase of its restructuring and will cut 1,300 to 1,500 jobs. The company expects total restructuring and impairment charges of $35 million to $45 million and expects the restructuring to be complete within the next 12 months. The company forecast fiscal third-quarter earnings from continuing operations, excluding items, of 4 cents to 6 cents a share, on revenue of $2.9 billion to $3.1 billion. Analyst expect a per-share profit of 5 cents on revenue of $2.87 billion.
  • Spectrum Control's (SPEC) fiscal first-quarter net income jumped to $2.12 million, or 16 cents a share, from $290,000, or 2 cents a share, a year earlier. Sales for the quarter ended Feb. 28 rose 29% to $32.9 million from $25.6 million, helped by recent business acquisitions and improved internal growth. The electronic control products and systems manufacturer expects second-quarter earnings of 18 cents to 19 cents a share on sales of $33 million to $34 million.
  • Take-Two (TTWO) shareholders owning 46.1% of the videogame maker's stock succeeded in removing the company's board and replacing it with six new directors.
  • Tibco Software (TIBX) reported first-quarter net earnings of $10.4 million, or 5 cents a share, up from $5.6 million, or 3 cents a share, during the year-ago period. Pro forma earnings were $15.2 million, or 7 cents a share, compared with $12.6 million, or 6 cents a share, last year. The maker of business integration and process management software posted total revenue of $125.7 million vs. $114.6 million.
  • Tribune (TRB) received a last-minute bid from California businessmen Ron Burkle and Eli of $34 a share, topping Sam Zell's proposal by $1 a share.
  • UBS (UBS) is cutting about 75% of its NYSE floor staff of about 30 people, following similar moves at other firms as the NYSE relies more on electronic trading.
  • United Technologies (UTX) agreed to buy the IESG unit of Britain's Rentokil for $1.17 billion, part of its expansion into electronic fire-and-security monitoring.

Market Update

  • Asian trading closed with the Hang Seng -0.11%, Nikkei +0.14%, Shanghai -0.42% and Taiwan +0.46%.
  • Looking over at Europe, we find the CAC -0.24%, DAX +0.06%, FTSE -0.45%, ATX +0.05%, Swiss Mkt. -0.06% and Stockholm -0.09%.
  • Gold is trading -1.5 to 669.0 and crude oil is +0.62 to 66.65 this morning.
No positions in stocks mentioned.

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