Thursday, July 27, 2006

Notablecalls - Paperstand

According to The Wall Street Journal, 5 major telecom-equipment vendors are set to announce today major changes to their next-generation network technology to help telecom operators accelerate their introduction of features that combine phone, television and Internet services. The co's, Cisco (CSCO), Lucent (LU), Motorola (MOT), Nortel (NT) and Qualcomm (QCOM), have been working for the past year to revise their systems to meet Verizon Wireless's requirements. But they are planning to sell the new technology to other carriers as well. Carriers rolling out new multimedia features are expected to spend billions of dollars in coming years on new Internet-based technology, known as IMS, for Internet Protocol Multimedia Subsystem.

The WSJ's "Heard on the Street" column discusses favorably Automatic Data Processing (ADP), saying that it has a huge and growing stash of cash that could keep investors happy, and a business model that could help it beat other stocks if interest rates keep rising. "This stock is cheap here," says Brandt Sakakeeny, an analyst with Deutsche Bank. Mr. Sakakeeny rates the stock a Buy. The "reputational black eye" the co suffered recently might be why it has underperformed in the past 2 weeks, says Gary Bisbee, an analyst with Lehman Brothers who gives the stock an Overweight rating.

Barron's Online discusses Borders Group (BGP), whose shares are down 15% YTD. A bottom-feeding investor might see opportunity in these beaten-down shares. And Borders is taking steps to boost earnings and mollify investors. The co is remodeling its nearly 480 domestic superstores, closing or rebranding its underperforming Waldenbooks chain, and luring customers with its Borders Rewards loyalty program. But analysts say that despite the co's best efforts, a downbeat book sector coupled with an overall weak retail environment will continue to damp Borders' earnings as weak wage growth and high gasoline prices put pressure on bookworms. Deutsche Bank analyst Dave Weiner says, "In a nutshell, I like what [Borders] is doing with the remodels, but I don't think investors are going to reward those anytime soon given the headwinds [Borders] is fighting."

No comments: