Top Stocks For 2/29/2012-9

Cognizant Technology Solutions Corp. (Nasdaq:CTSH) , a leading provider of information technology, consulting, and business process outsourcing services, and CoreLogic (NYSE:CLGX), a leading provider of information, analytics, and business services, announced a definitive agreement under which Cognizant will acquire CoreLogic Global Services Private Limited (CoreLogic India), the India-based captive operations of CoreLogic. The purchase price will consist of a cash payment of approximately $50 million, plus adjustments for working capital and other charges or credits which will be determined at closing.

Cognizant Technology Solutions Corporation provides information technology (IT) consulting and technology services, as well as outsourcing services in North America, Europe, and Asia.

ICF International Inc. (Nasdaq:ICFI) has been awarded a re-compete contract from the U.S. Department of Health and Human Services (HHS), Office of the Assistant Secretary for Health, Office of the Surgeon General, Office of the Civilian Volunteer Medical Reserve Corps (OCVMRC). The contract has a value of $16.3 million and a term of one base year and four option years.

ICF International, Inc. provides management, technology, and policy consulting and implementation services to government, commercial, and international clients.

Insteel Industries Inc. (Nasdaq:IIIN) reported net earnings of $3.7 million ($0.20 per diluted share) for the third quarter of fiscal 2011 compared with $1.6 million ($0.09 per share) in the third quarter of fiscal 2010. Net earnings for the current year quarter include restructuring charges of $2.0 million ($0.07 per share after-tax) related to the November 2010 acquisition of certain of the assets of Ivy Steel & Wire, Inc. (”Ivy”).

Insteel Industries, Inc. engages in the manufacture and marketing of steel wire reinforcing products for concrete construction applications.

National Health Partners, Inc. (NHPR)

National Health Partners, Inc. is a national healthcare savings organization that provides discount healthcare membership programs to uninsured and underinsured people through a national healthcare savings network called “CARExpress.” CARExpress is one of the largest networks of hospitals, doctors, dentists, pharmacists and other healthcare providers in the country and is comprised of over 1,000,000 medical professionals that belong to such PPOs as CareMark and Aetna. The company’s primary target customer group is the 47 million Americans who have no health insurance of any kind. The company’s secondary target customer group includes the millions of Americans who lack complete health insurance coverage. The company is headquartered in Horsham, Pennsylvania.

Employees and employers are getting squeezed by the price of health care. The struggle to control health costs is viewed as crucial to improving wages and living standards for working Americans. Employers are paying more for health care and other benefits, leaving less money for pay increases. Benefits now devour 30.2 percent of employers’ compensation costs, with the remaining money going to wages.

The runaway cost of health care has long been a concern, largely because of the huge number of Americans estimated at 47 million who are uninsured. But health-care costs are re-emerging as an economic and political issue in part because of the role they play in the stubborn problem of stagnating wages.

National Health Partners, Inc. a leading provider of unique discount healthcare membership programs, announced that it has entered into agreement with a major Hispanic marketing group for the sale of its CARExpress programs. The company also sees growth in new sales of memberships of more than 300% thru the remainder of the year.

Under the new agreement, this national Hispanic marketing group will be promoting the company’s CARExpress discount healthcare membership program to Hispanic communities located across the United States, with particular focus on cities and regions containing a large number of Hispanics. With the previously announced plans to increase monthly sales by 75% with its newest and most successful marketing partner, the company now expects sales of new members to grow more than 300% thru the remainder of the year.
Please visit its website at www.nationalhealthpartners.com

j2 Global Communications, Inc. (Nasdaq:JCOM), the provider of cloud-based services for businesses, invites the public, members of the press, the financial community, stockholders and other interested parties to listen to a live audio Webcast of its Second Quarter 2011 Earnings Conference Call at 5 p.m. Eastern Time on August 2nd, 2011. Hemi Zucker, chief executive officer; Scott Turicchi, president; and Kathy Griggs, chief financial officer, will host the call. Materials presented during the call will be posted on the Company’s Web site at http://www.j2global.com at least thirty minutes prior to the call and filed with the Securities and Exchange Commission pursuant to Regulation FD.

j2 Global Communications, Inc. provides outsourced, value-added communication, messaging, and data backup services to businesses of all sizes, from individuals to enterprises worldwide.

FleetCor Technologies Increases Sales but Misses Estimates on Earnings

FleetCor Technologies (NYSE: FLT  ) reported earnings on Feb. 8. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), FleetCor Technologies beat expectations on revenues and missed expectations on earnings per share.

Compared to the prior-year quarter, revenue increased significantly and GAAP earnings per share increased significantly.

Gross margins dropped, operating margins dropped, net margins improved.

Revenue details
FleetCor Technologies reported revenue of $140.2 million. The five analysts polled by S&P Capital IQ foresaw a top line of $128.4 million on the same basis. GAAP reported sales were 32% higher than the prior-year quarter's $106.5 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.45. The three earnings estimates compiled by S&P Capital IQ anticipated $0.48 per share. GAAP EPS of $0.45 for Q4 were 45% higher than the prior-year quarter's $0.31 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 71.0%, 410 basis points worse than the prior-year quarter. Operating margin was 38.7%, 600 basis points worse than the prior-year quarter. Net margin was 26.9%, 1,050 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $146.3 million. On the bottom line, the average EPS estimate is $0.53.

Next year's average estimate for revenue is $634.8 million. The average EPS estimate is $2.61.

Investor sentiment
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on FleetCor Technologies is outperform, with an average price target of $34.33.

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Quit Chasing Gold and Buy This ETF

With gold continuing to make new all-time highs, precious metals are all the rage among investors. But before you go chasing shiny things, I want to tell you that there are far better short-term opportunities than gold right now.

It’s true that it would be difficult to find a long-term chart that is stronger or more persistent than that of the gold ETF, SPDR Gold Trust (NYSE: GLD). It is nothing short of amazing (and at the same time scary for the future of the U.S. dollar). That said, even as gold has made new highs in recent days, there is a better place to focus your trading capital: semiconductors.

The semiconductor industry has taken off in recent days, and I expect the move to continue. Here’s a performance chart comparing the headline-making GLD rally and the Semiconductor HOLDRs ETF (NYSE: SMH).

What’s behind the semis’ strong performance?

It’s certainly not the lackluster outlook from PC manufacturers who continue to see challenges ahead. It was just three weeks ago that Intel Corporation (NASDAQ: INTC) slashed their outlook sending the stock down nearly 4%. Others like Cisco Systems Inc. (NASDAQ: CSCO) have also expressed concern with talk of “unusual uncertainty” in the global economy that could impact sales.�

If these headlines weren’t enough, many analysts also believe Apple Inc.’s (NASDAQ: AAPL) iPad is hurting sales in the semiconductor industry because the chip used is Apple branded and made by Samsung, so the major semi players are not benefiting from this particular increase in chip demand.�

So, what is making semiconductor stocks and SMH move?

In a classic contrarian move, semiconductors shifted into high gear directly after industry leader Intel lowered its outlook. And SMH had one of the strongest ETF trends in September, which I believe it will continue this month.�

To learn more about why SMH is trading higher, watch the video here.

Top 5 Stocks for the Fourth- Quarter Surge — Louis Navellier details five stocks set to deliver record earnings this October, and jump 30%-50% in the next 90 days as the big money piles in. Get their names online here, including Louis’ buy-below and target prices.

Google Running Out of Steam – Sell Now

Google (NASDAQ:GOOG) — The world�s largest Internet company may see an increase in revenues in 2012, but a decrease in net profits in likely due to costs from recent acquisitions and a slowing world economy.

On the long-term weekly charts, GOOG has been in a rectangle for over four years without a successful breakout. Major support is around $460, and a break below that line could lead to a serious decline.

Buying momentum is falling and internal indicators are universally overbought. The recent advance may be an early present to those that cash in on Google. At the very least, holders should take protective steps to limit losses by selling calls or buying puts on the stock.

When the Invisible Hand Is the Government

Adam Smith in his Wealth of Nations pictured an invisible hand that operated behind the scenes to make capitalist markets operate efficiently. When that invisible hand becomes the government, you no longer have capitalism, nor do you have efficiency. The self-correcting mechanisms of capitalism are also eliminated and the market loses the ability to fix itself. Three pieces of news - China trying to reign in bank lending in late November, the U.S. 3rd Quarter GDP report, and the Bank of England admitting to secret loans to big banks during the Credit Crisis - are representative of how important government's hand in the global economy has become.

China is the growth success story of the world. Its economy is indeed humming along. The tune it seems to be singing however is ‘bubbles are here to stay’. Along with freezing the exchange rate of the yuan at artificially low levels in 2008, the government has pumped incredible amounts of money into the financial system in the last year in order to maintain a high growth rate.

Anecdotal stories out of China indicate that a lot of the money is being used to build empty office buildings, unused infrastructure and even empty cities. The government's warning to banks that they should control lending seems a bit hypocritical to say the least. Markets around the globe sold off when the news came out in late November however, which tells you just how important Chinese growth is viewed as a cornerstone for global recovery from the Credit Crisis.

The U.S. could learn a thing or two from China on how to goose up a flagging economy (as for government hypocrisy, the U.S. needs no instruction). Revisions to the third quarter U.S. GDP in November indicated that growth was only 2.8% instead of the originally reported 3.5%. GDP was further revised downward to 2.2% in December. Cited for lowering the numbers were a bigger trade gap, lower commercial construction, consumers didn't spend as much and business inventories fell more than expected. None of these are surprising and they are all probably still considerably overstated. Without the Cash for Clunkers program and the federal housing purchasing subsidies, there would have been no economic growth and U.S. government officials wouldn't have been able to shout from the rooftops that the recession is over. This reminds me of the press conference that Herbert Hoover gave in June 1930 announcing the depression was over (there were three more grueling years ahead before the U.S. economy even hit bottom). If he had today's government statisticians, he could have produced the numbers to prove everything was in great shape.

On November 24th, the Bank of England admitted that it secretly lent over $1 billion dollars to two major banks - the Royal Bank of Scotland (RBS) and HBOS PLC - to keep them afloat during the height of the Credit Crisis in late 2008. HBOS was later merged with Lloyds Banking Group (and you can probably guess which invisible hand brought them together). Both banks have since been nationalized with the UK government owning 84% of RBS and 43% of the Lloyds/HBOS combined firm. Lloyds is now in the process of raising a massive amount of new capital.

One would have to be pretty naive to believe these were the only secret government dealings during the Credit Crisis. What could have happened in the U.S. boggles the mind. The Federal Reserve is an unaudited enterprise and operates in secrecy as is. Fed chair Ben Bernanke has refused to provide information requested by congress about the bailouts. If there's nothing to hide, why is he hiding it?

Novavax Has Over 400% Upside Potential

My colleague, Reef Anderson (see bio on Seeking Alpha), Head of Research at the fund I manage, has put together this detailed research report for our investment team. Reef Anderson believes the recent news events for Novavax (NVAX) was extremely big, but he says "the bigger news is yet to come."

Novavax is extremely undervalued and the recent pull back from the $3.50 level represents an extraordinary entry opportunity. By the end of summer, Reef Anderson expects Novavax stock price will easily double. His 12 to 18 month price target is $11 to $14 per share, returning to its 2002 stock price levels. The details of his analysis will be presented later in this article, but first, he address the key drivers that make Novavax a compelling "buy and buy more" proposition.

Novel, Patented Technology and Recent Developments

Novavax, Inc. (Novavax) is a biopharmaceutical company focused on developing recombinant vaccines. Recombinant protein-based vaccines are widely used and accepted. Examples of vaccines currently available that use recombinant protein particle technology include Recombivax HB by Merck (MRK) and Engerix by GlaxoSmithKline (GSK), which protect against Hepatitis B, and Gardasil (Merk) and Cervarix (GlaxoSmithKline) which protect against human papillomavirus.

However, the key difference of NVAX is the production technology which uses insect cells rather than chicken eggs or mammalian cells. The technology platform is based on proprietary virus-like particles (VLPs). VLPs are not made from a live virus and have no genetic nucleic material in their inner core, which renders them incapable of replicating and causing disease. This platform offers several potential significant advantages over traditional vaccine production methods, including: (1) higher yields than traditional mammalian or egg-based system, (2) faster facility commissioning time, (3) significantly lower capital expenditures on infrastructure, (4) competitive cost of goods, (5) shorter lead time to produce vaccine than egg-based technology, and (6) a scalable production process that can respond rapidly to pandemic outbreaks, which is a key concern for the U.S. and other governments.

There are some notable facts and recent developments which attest to the viability, efficacy and superiority of Novavax's Technology and Pipeline:

1) BARDA Contract Award – In February, 2011, the U.S. Department of Health and Human Services (HHS) Biomedical Advanced Research and Development Authority (BARDA) awarded Novavax a contract valued at $97 million for the first 36 month base-period, with an option period of 24 months valued at $82 million, for a total contract value of up to $179 million. The HHS BARDA contract award provides significant funding for the continued ongoing clinical development and product scale-up of seasonal and pandemic influenza vaccine candidates. This is a cost-plus-fixed-fee reimbursement contract in which HHS BARDA will reimburse Novavax for direct contract costs incurred plus allowable indirect costs and a fee earned in the further development of seasonal and pandemic H5N1 influenza vaccines. This award eliminated a significant overhang for the company in that they achieved a significant source of funding and a tremendous increase to its top line revenue. The key to the award is that Novavax' technology meets HHS' goals for increasing the capacity to produce flu vaccine in a much shorter time frame, in particular, the ability to enhance pandemic vaccine manufacturing surge capacity. I do not believe Novavax will have any problems achieving the extension of the contract into the second period which will allow them to receive the additional $82 million. The following two examples highlight the company's ability to achieve shorter time frames and hence increase the probability of the second award:

• In 2009, using VLP technology, NVAX manufactured an H1N1 VLP vaccine candidate under cGMP at their vaccine manufacturing facility in Rockville, MD within eleven weeks after receiving the gene sequence from the CDC. The company's named above (Merk and GlaxoSmithKline) typically take over 6 months to ramp up production.
• Per the company's form 10-K filed March 28, 2011, "The agreement with Xcellerex expired by its own terms on February 15, 2010. Although the H1N1 manufacturing campaign with Xcellerex did not result in the manufacturing of acceptable vaccine to Novavax, we did achieve proof of concept by scaling-up to a commercial grade bioreactor. The success in scaling-up our VLPs in stir tank bioreactors using single-use disposables potentially provides an additional path to large-scale, commercially viable vaccine production. During 2010, we manufactured multiple large-scale VLP production runs using our 1,000 liter bioreactor in our Rockville, MD facility and have successfully demonstrated that we can produce VLPs at high-yields, a competitive cost per dose of manufactured vaccine at acceptable quality standards."

2) First Licensing Deal for VLP Vaccine Technology – On March 1, 2011, Novavax announced an exclusive license of its VLP vaccine technology to manufacture, develop and commercialize influenza vaccines in South Korea and certain emerging market countries. Novavax will provide technology transfer and manufacturing support and in return receive upfront and milestone payments from LGLS as well as double-digit royalty rate payments from commercial sales. Dr. Rahul Singhvi, CEO and President of Novavax, commented, "LGLS is an affiliate of LG, a global conglomerate. LGLS is a leading provider of vaccines to supranational health organizations such as UNICEF and the Pan American Health Organization. We welcome this opportunity to develop a recombinant influenza vaccine solution for South Korea and other countries served by LGLS. This new partnership with LGLS is further validation of our VLP technology and, as we have done previously with our joint venture in India with Cadila Pharmaceuticals, further expands our development efforts into new territories. LGLS will help us advance our technology in Korea and other countries, consistent with our commercial strategy of developing regional partnerships and in-country manufacturing solutions with leading pharmaceutical companies around the world."

3) The company has announced excellent pandemic and seasonal flu vaccine Phase II results.- The Center for Disease Control and Prevention (CDC) has indicated that currently approved seasonal influenza vaccines have shown to be as little as 30% effective in preventing hospitalization for pneumonia and influenza in older adults. However, per Dr. Rahul Singhvi, "Data from our Phase IIa trial in healthy adults showed that 50 to 73% of the volunteers immunized with our VLP vaccine had a 4-fold increase in the antibody that blocks NA activity." This is a marked improvement that increases the probability of FDA approval and subsequent market acceptance.

4) Competing technology remains egg-based. Below is a table of Novavax's competitors from the company's 10-k filed March 28, 2011

Company		Competing Technology Description
sanofi pasteur, Inc.		Inactivated sub-unit (egg-based)
MedImmune, LLC (a subsidiary of AstraZeneca PLC)(AZN)		Nasal, live attenuated (egg-based)
GlaxoSmithKline plc		Inactivated (egg-based)
Novartis, Inc. (NVS)		Inactivated sub-unit (cell and egg-based)
Merck & Co., Inc. (MRK)		Inactivated sub-unit (egg-based)

Cash availability and cash burn

Seasoned biotech investors know that cash is essential to prevent dilution. As per NVAX's 10-k released March 28, 2011. "Based on our cash, cash equivalents and short-term investment balances as of December 31, 2010, anticipated revenue under the HHS BARDA contract awarded in February 2011, anticipated proceeds from the sales of our common stock under our At the Market Sales Agreement and our current business operations, we believe we will have adequate capital resources available to operate at planned levels for at least the next twelve months." There are only approximately 14 million shares left that the company can issue in the "At the Market Sales Agreement" and therefore, dilution is minimal. Note, in my valuation below, I assume a larger share increase through 2014 (approximately 27 million shares). There are a few key factors behind this assumption:

1) The HHS BARDA Contract offers Cost Plus payments, some of which include fixed costs. So the incremental costs of additional research have a minimal impact on margins.

2) The variable cost of vaccine manufacture is truly minimal at approximately 15%. This leaves fixed costs, most of which have been incurred in the ramp up of Novavax's facilities or will be incurred by licensing partners.

Valuation

Novavax has positioned itself to be a major player in several markets:

1) RSV- The company is on track with its respiratory syncytial virus vaccine which targets a $1 billion market opportunity.

2) Pandemic Viruses- Earlier this month, the company presented excellent immunogenicity data from Novavax' H1N1 vaccine clinical trial conducted in Mexico. Such pandemics represent multi-billion dollar opportunities as was demonstrated by Swine Flu and Avian Flu outbreaks

3) Influenza- Novavax is positioned to emerge as a major influenza vaccine player. Based on the expanding recommendation of vaccination to new age groups, the growing worldwide population to be vaccinated, and the need of an improved influenza vaccine for the elderly, global market projections of seasonal influenza are estimated to increase from $2.8 billion in 2007 to $6.5 billion by 2013. (click here)

Novavax has many potential applications of its technology and pipeline, and the first two applications given above are large. But to be conservative in the valuation estimate, let's consider only the Influenza application. It should be noted that I expect submission of the BLA for the Seasonal Flu Vaccine next year and Licensing of the Seasonal Flu VLP by 2013.

If we assume that Novavax licenses its Seasonal Flu VLP vaccine and that its partners capture 10% of the projected $6.5 billion market. Also, to be conservative, let's assume we completely ignore upfront licensing payments and assume a royalty of 18% payable to Novavax: $6.5 billion x 0.10 x 0.18 = $117 million annual royalties.

Now, if we also assume that the BARDA grant is extended for 2014 and 2015. Additional Annual revenues would be $41 million per year, for a total of $117 million from royalties + $41 million from BARDA = $158 million total.

Then, given that the licensing strategy will impose relatively low additional fixed and variable costs, let's assume that operating expenses increase to $42 million per year. Pre-tax income would be approximately $116 million and net income would be approximately $81 million.

As stated above under the cash burn section, let's assume the company will issue 26% more additional shares taking the shares outstanding from 105 million to 132 million. We derive an EPS of approximately $0.62 per share in 2014 ($81 million / 132 million shares). Discounting annually at 20% and assuming the stock will trade at 30x2014 EPS, fair value for the influenza application alone could be estimated to be $10.70 per share. Clearly, the stock is very undervalued and I expect to see the stock price triple by the end of this year and quadruple by the end of 2012.

Disclosure: I am long NVAX.

Netflix Still Has a Long Way to Go

It continues to be a redemptive year for Netflix (Nasdaq: NFLX  ) .

Shares of the video giant have soared nearly 42% in just the first five trading days of 2012.

This isn't just some lazy rally. At least 12 million shares have traded hands in each of the past four trading days. There were just two days in all of December with eight-digit trading volume. The last time that investors traded as many as the 30.6 million shares swapped yesterday was the day the stock tanked after Netflix's disastrous third-quarter report in late October.

I may have been joking when I suggested tapping CEO Reed Hastings as this young year's top CEO, but shareholders who were waiting until last year's tax-loss selling subsided to buy back into the company are certainly doing well right now.

Can the rally continue? Are the recent gains even sustainable?

Obviously a lot has to go right for Netflix to continue wooing back cynical investors.

Last week's encouraging revelation of 2 billion hours of streaming video served during the fourth quarter and this week's overseas debut in the U.K. and Ireland are great, but there are still a lot of things that Netflix needs to do.

There was also speculation by Piper Jaffray's Gene Munster on CNBC suggesting that Netflix would make an ideal takeover target by Yahoo! (Nasdaq: YHOO  ) -- but a stock doesn't pop 42% higher because some analyst is simply thinking out loud.

As great as the past five trading days have been, Netflix would still have to more than triple from here to hit the all-time highs it landed just six months ago. In other words, Netflix still has a long way to go before making all of its investors whole -- and we're not just talking about the distance that the stock needs to travel.

After scaring away 800,000 net subscribers during the third quarter and warning of near-term losses, Netflix will have to stop the bleeding on both fronts before its stock can rest comfortably in the triple digits.

The good news is that folks are no longer making Netflix jokes. No one's calling yesterday's overseas rollout Quidster. Well, I just did, but that's about it. (Call me if you want that one, Jay Leno.)

Even the official blog entry detailing Netflix's entry into the U.K. and Ireland was generally greeted by praise and excitement. Folks from other European countries lobbied for their homelands to receive Netflix next. The initial users -- comparing it to Amazon.com's (Nasdaq: AMZN  ) LOVEFiLM -- rated it superior in terms of content (which is a surprise) and quality (which is not, since LOVEFiLM still only streams in standard definition).

Netflix is winning back the respect of its customers, and that in turn will earn it renewed support of studios. It will be a long road back, but at least the company's finally turning in the right direction.

Motley Fool co-founder David Gardner has been a fan of Netflix as a disruptor for nearly a decade, but there's a new Rule-Breaking mutlibagger that he's getting excited about these days. Learn more in a free report that you can check out now.

Buy, Sell or Hold: Cypress Semiconductors Boasts a Strong Showing Since Dec. 14 Recommendation

Back on Dec. 14 of last year - as the market had "inexplicably" risen and investors were jumping ship - afraid that the market would correct - I issued a call to buying Cypress Semiconductors Corp. (Nasdaq: CY).

I mentioned back then that, at $10.40 per share, the stock was a steal and that several factors would propel it much higher.  Today, with the stock having rallied some 10%, we will review these reasons to analyze their validity moving forward:

• I noted that we were picking a semiconductor stock at the beginning of a strong tech cycle, and that semiconductors are typically the first in the tech sector to hit a recession and the first to get out of it.  Well, the U.S. Federal Reserve last week clearly singled out technology as an area of unusual strength in the U.S. economy.  And, as U.S. economic growth becomes more and more ingrained, it continues to validate my thesis that we are at the very inception of a strong tech cycle.

• We talked about Cypress semiconductors being the poster child of cyclicality and that margins would continue expanding.  The company's first-quarter earnings release revealed exactly that. Despite the poor performance of Palm Inc.'s (Nasdaq: PALM) Pre - which relies on a Cypress chip for its screen management - its Static Random Access Memory division saw 17% sales increases.  Revenue in the first quarter, which traditionally goes down, actually went up by 4%, which is very positive.  There was a 90% increase in revenue coming from chips used in handsets, a segment that I highlighted as a strong growth area in my December analysis.  This segment will continue to sharply increase.

• And with all the good news in sales, given the firm's operating margins expanded strongly, I had expected gross margins to grow to as much as 50% from 42% in the last quarter.  They actually hit 52.6%. Clearly, Cypress Semiconductors is a company on the move.  The company now has posted its first back-to-back quarters of operational gains in nearly two years.

• I said in December that stronger earnings would be the main catalyst for higher stock valuation. Cypress semiconductors not only delivered profits, but it again showed momentum towards faster growth of both sales and profit.  This allowed Cypress to handily beat analysts' estimates in January and April.

You see, this poorly understood company is actually a major innovator.  Internally, it has a venture capital firm mentality that fosters creativity.  In this way, it created SunPower Corp. (Nasdaq: SPWRA) and spun it off in 2008.  But Cypress' exclusive dependence on SunPower's earnings power is behind.  The company now is growing strongly in high-margin products like touch screen controller chips.

Its new PsoC (programmable system-on-chip) is a quantum leap over non-programmable chips used in gadgets. Also, its True Touch technology has gained acceptance by key handset manufacturers.  Another key new technology is its West Bridge system, which allows for faster downloads on mobile phones.  So when we think of Cypress, we increasingly think mobile, mobile, mobile!  And clearly, this is an area of very high growth in the market.

Our position on Cypress in the last two quarters has been validated by strong results.  Moving forward, the U.S. economy keeps accelerating with gains in retail sales and some incipient gains in employment.  The tech sector, in particular, is enjoying its own rebound due to the broadband wireless Internet revolution started by the Apple Inc. (Nasdaq: AAPL) iPhone.  This trend is gaining momentum, and Cypress is introducing new, high margin products that could gain major traction.

Since I believe that we are at the very beginning of a long new tech cycle, and that our investment in Cypress Semiconductors has been validated, I recommend investors stay long on the stock.  It currently enjoys very low price-to-earnings (P/E) and price-to-earnings-to-growth (PEG) ratios, and it has a lot of room to run before it becomes overvalued - even without any earnings growth.  I expect earnings growth to accelerate, which makes the potential gains for Cypress much larger.

Technically, the stock is in a clearly bullish mode, well above its 200, 50 and 20-day exponential moving averages. It did not budge much at all in the recent weakness, showing strong resiliency.  In addition to a clear message about tech from the Fed, offshore hedge funds have been flocking to tech.  So we have both strong fundamental and technical reasons to remain bullish on Cypress stock. 

Shares of Cypress Semiconductor on Friday fell 56 cents, or 4.69%, to close at $11.37. That's at the top end of its 52-week trading range of $6.86 a share and $11.96 a share.

Recommendation:  Investors who do not own Cypress Semiconductors Corp. (Nasdaq: CY) should buy it at market (**).  Investors that already own it should hold it and consider adding on any weakness.

(**) - Special Note of Disclosure: Horacio Marquez holds no interest in Cypress Semiconductors Corp.

[Editor's Note: Horacio Marquez knows how to make a market call. It was Marquez who told investors that lithium was going to be big - a year before other "experts" made the same call. Now Marquez has isolated the major profit opportunities being created by the possible broadband breakdown - a situation that the news media is only just now starting to understand. To find out all about those top profit opportunities, check out this new report.]

The Facebook IPO Date Is (Almost) Set

The Facebook date has finally been announced. Sort of.

According to a CNBC report, Facebook will hit the public markets on May 17 — or May 24th, according to a person familiar with the matter. The company will list on the Nasdaq under the ticker �FB,” and Facebook’s underwriters include Morgan Stanley (NYSE:MS), JPMorgan Chase (NYSE:JPM) and Goldman Sachs (NYSE:GS).

The plan is for Facebook to begin its roadshow on May 7, though it’s not even clear whether CEO Mark Zuckerberg will even give presentations to potential investors.

It�s possible that the recent $1 billion acquisition of Instagram could change the timeline — say by a week or so — though the transaction seems straightforward. Besides, Facebook has taken a fairly conservative approach with its accounting, which has helped smooth the going-public process with the Securities and Exchange Commission.

While the Facebook IPO almost certainly will be in huge demand, the valuation could face some headwinds.

The recent plunge in the equities markets could put downward pressure on the valuation, as could the performances of social companies like Groupon (NASDAQ:GRPN) and Pandora (NYSE:P), which have watched their values fall substantially over the past few weeks.

Tom Taulli runs the InvestorPlace blog�IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of��The Complete M&A Handbook”,��All About Short Selling��and��All About Commodities.��Follow him on Twitter at�@ttaulli�or reach him via�email. As of this writing, he did not own a position in any of the aforementioned securities.

Women and Money: How You Can Close the Financial Gender Gap

In my career as a financial advisor, I have spoken with thousands of men and women about their finances. After a while, I saw patterns emerge in the differences between the sexes with regards to money -- how they viewed money, how they managed money, and how they wanted to learn about money.

I thought I might be making too many generalizations based on my experiences, but then I came across a recent study on the gender gap in financial literacy that supports my findings.

Widening Gender Gap in Financial Literacy

According to a recent study from Financial Finesse, a company that provides workplace financial wellness services, women are falling behind men in several areas of financial planning. This gap is noticeably growing with regards to paying off debt, arming an emergency fund with a few months' living expenses, and having basic stock, bond, and mutual fund knowledge.

On a positive note, the study found little to no gender gap with respect to longer-term planning. Women participate in workplace retirement plans about as much as men, and also report roughly equal engagement with long-term estate planning.

It's the nitty-gritty of financial management where women are coming up short. To better understand why, here's what I discovered that women want in terms of their personal finances.

• Women want peace of mind: For women, financial peace of mind is the ultimate personal finance goal. Women want a secure and sound financial future for themselves and their families, and they view their investments as a way to support and protect their loved ones. Surveys -- and my personal experiences as a financial advisor -- show men are typically more interested in wealth accumulation.

• Women want time to research their options: Women are deliberate decision-makers and take their time doing research. Women prefer gathering information from a vast group of experts before taking action and initiating a plan. Women also prefer thinking through and planning for "devil's advocate" and "what if" scenarios to help protect them against the unexpected.

• Women want an ally, not a bossy know-it-all: Education, collaboration, and patience are critically important to women. If a woman feels condescended to or the environment does not foster question-asking, then she'll disengage from the dialogue. A woman needs to feel the financial educator is an empowering ally, not a rival. Whereas men typically want the facts and information to make investing decisions on their own, women prefer a collaborative, nurturing environment.

Get More Engaged with Your Finances

The good news is women are seeking financial information and education at rapid rates -- roughly twice the rate of men, according to Financial Finesse's findings. That's a trend worth continuing, particularly in light of the unique financial challenges women face. (See "The $849,000 Penalty for Being Born Female" for more on that.)

Here's how you can take matters into your own hands.

• Educate yourself. Look for an investing class at a local community center or college. Many of them are free or very low cost. Join an investment club. Ask your daughter, sister, mother, or friend to attend with you. Have fun with it.
• Make the most of the savings tools available to you at your workplace or if you are self-employed.
• If your spouse or partner handles the money, call a family finance meeting. Ask that individual to teach you what s/he does. Find out how the budget looks, bills are paid, household cash is managed, and investments are monitored. After you understand, take your turn. You don't have to do it forever, but you should know how. You may even enjoy it and improve your family's finances.
• If you choose to get professional financial help, interview prospective financial advisors. If the advisor won't take the time to listen, get to know your needs, and explain concepts to you clearly and simply, then feel free to walk out and don't look back. Find an advisor who speaks your language at your pace.

Gallery: The $849,000 Penalty for Being Born Female

For more on this topic, see:

• What Wealthy Women Want ... From Their Financial Advisers

Frontline Sees Stormy Seas Ahead

John Fredricksen, Frontline's (FRO) largest shareholder, sounded a cautionary note for the oil shipping industry, noting that a large spike in ship deliveries over the next two years will, in all likelihood, drive charter rates down.

According to an article that appeared in the weekend issue of the Financial Times, 180 VLCCs (Very Large Crude Carriers) are scheduled to be delivered over the next two years. This is the equivalent of 33 percent of the existing fleet!

Because Frontline has always dealt primarily in the spot charter market, this will weigh on earnings, and by extension, the share price. Fredricksen's announcement that third quarter earnings would be "materially below" the $81.3M earned in the second quarter, caused a 4.6% drop in share price on the Oslo exchange.

According to the article, Frontline needs, on average, $30,900/day to cover operating costs for their VLCCs. During the second quarter, FRO's average rate was $46k/day, but last week's rate for VLCCs running between the Gulf, and the UK had dropped to as low as $7426, causing the company to pull some tonnage out of the market.

Over the last 4 quarters, FRO paid dividends of:

• 9-9-09 $0.25
• 12-4-09 $0.15
• 3-5-10 $0.25
• 6-2-10 $0.75

Interestingly enough, JP Morgan recently (on July 21) raised FRO to overweight, from underweight, saying that they expect rates to start to recover in the 4th quarter of 2010.

Given John Fredricksen's years of experience, and notable reputation as a savvy operator, I'd give more weight to his outlook on the sector.

Sources:

• Financial Times
• MarketWatch Pulse

Disclosure: Author is long TNK, TOO, DHT

Gupta, Former Goldman, P&G Director, Convicted of Insider Trading

Rajat Gupta, a former director at both Goldman Sachs (GS) and Procter & Gamble (PG) was convicted for passing confidential information to a hedge fund that profited off positions in the stocks.

Gupta is arguably the biggest fish to be caught in the government’s net in its expanding battle against insider trading.

He was convicted by a federal jury on two counts of securities fraud and one count of conspiracy — the fraud charges carry possible 20 year sentences, and the conspiracy charge carries a possible five year sentence.

Gupta , the former CEO of McKinsey Consulting, vowed to fight on. His attorney, Gary Naftalis, said:

“We believe the facts of this case demonstrate that Mr. Gupta is innocent of all these charges, and that he has always acted with honesty and integrity. This is only Round One. We will be moving to set aside the verdict and will if necessary appeal the conviction.”

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Barney Frank Tells AdvisorOne: No to Bachus’ SRO

Reps. Spencer Bachus and Barney Frank (right) conferring in 2010. (Photo: AP)

A couple of days after announcing that he won’t seek re-election in 2012 and plans to retire from Congress at the end of next year, Rep. Barney Frank, D-Mass., ranking member on the House Financial Services Committee, told AdvisorOne on Thursday that he “doesn’t like” his committee chairman’s bill calling for a self-regulatory organization (SRO) for advisors.

Frank told AdvisorOne, after addressing attendees at the Consumer Federation of America’s (CFA) financial services conference in Washington, that GOP lawmakers’ excuse that an SRO for advisors is needed because the Securities and Exchange Commission (SEC) lacks the resources to handle advisor exams doesn’t hold water. Frank has been a staunch proponent of boosting funding for the SEC.

A new draft of House Financial Services Committee Chairman Rep. Spencer Bachus’ bill calling for an SRO for advisors is expected out soon, possibly before Congress’ tentative Dec. 18 break. The Dec. 18 recess date is a moving target, as Congress has yet to resolve several tax issues, namely the payroll tax cut which expires at the end of the year.

While Frank will remain a tough and influential legislator throughout 2012, his status as a ranking member on the financial services committee likely won’t prevent an SRO bill from being reported out of his committee. However, his objections to such legislation “can create a strong partisan bill” that reaches the House floor and “sends a signal” to the Senate about the problems associated with an SRO, Marilyn Mohrman-Gillis, managing director of public policy for the Certified Financial Planner (CFP) Board of Standards, told AdvisorOne.

An SRO bill already looks to be a tough sell in the Senate.

The SEC can’t move forward with an SRO until Congress enacts legislation telling it to do so. Bachus’ proposed bill would shift regulation and oversight of investment advisors to the Financial Industry Regulatory Authority (FINRA) or another private regulator, except for certain advisors whose assets under management are concentrated in mutual funds, private funds, or large clients.

Ken Bentsen, executive VP of public policy and advocacy at the Securities Industry and Financial Markets Association (SIFMA), told CFA attendees that SIMFA would like to see Bachus’ SRO bill “move” forward. While SIFMA supports an SRO for advisors, Bentsen said, “We haven’t come to the view that it ought to be FINRA” even though “a lot of [SIFMA’s] dual registrants believe it should; not because they are ‘in love’ with FINRA but because we have a ‘healthy relationship’ with FINRA.”

Lawranne Stewart, deputy chief counsel for Barney Frank’s office, who sat on the same panel with Bentsen to discuss the future of securities regulation, said that an SRO for advisors “will be a hot topic for a while.” Now that Dodd-Frank authorized the switching of advisors with assets under management of between $25 million and $100 million from federal to state registration by mid-2012, “the states have the chance to see what they can do with advisor exams,” Stewart said. “We’ll see what kind of impact that has. I think there is going to be a lot of evolution over the next few years, to see how this is going to work.”

Barbara Roper (left), director of investor protection for CFA, who sat on the same panel with Stewart and Bentsen, reiterated the fact that CFA “removed its opposition” to an SRO when it saw there was no chance Congress would award the SEC additional funding, something CFA has continually fought for.

During Frank's press conference on Monday from his home state announcing his retirement, he acknowledged that the “very substantial changes” in congressional redistricting was a primary reason he decided not to seek re-election, adding that such redistricting changes would take him away from serving his current constituents and protecting financial reform—one of his top goals.

Frank told attendees at the CFA event that the “public is committed to the financial reform bill continuing.”

Frank went on to say that “one of the gravest public policy mistakes Congress made this year” was the failure to increase funding for the Commodity Futures Trading Commission (CFTC). Despite having to regulate the derivatives market, and complaints of lax oversight of firms like failed MF Global, the House proposed that the CFTC get 15% less in funding in 2012 than it had this year, Frank said.

Also, the committee Frank sits on passed three bills on Wednesday to loosen derivatives rules in the Dodd-Frank Act that many had complained were too broad. The full House will now vote on them.

Quake Impact on Japanese and U.S. Automakers

By Sheena Lee

The disaster caused by Japan’s earthquake and tsunami risks affecting automakers in the US and elsewhere as well as in Japan as companies shut down manufacturing plants amid supply chain disruptions and uncertainty over the country’s crippled nuclear plant.

Analysts are most worried for names like Toyota (TM), Japan’s largest carmaker, Nissan (NSANY.PK), and Honda (HMC), which have all had to close down major manufacturing facilities due to the disaster.

“From all the things we’re gathering, including memos from Japanese companies … the potential impact of the tragedy is a bigger deal” than they are portraying, said Jesse Toprak, analyst at auto researcher TrueCar.com.

For now, Toyota has suspended overtime production at its North American plants, which get about 20% of their components from suppliers in Japan.

Toyota may lose output of at least 40,000 vehicles, according to Bloomberg News, and prices could rise — or incentives will fall — for imported models that may be in short supply, said Toprak. ”The biggest unknown is the potential shortage of parts produced in Japan for vehicles made elsewhere.”

Nissan’s highly sought-after all-electric Leaf, and its Quest family van, could be hit as well if production is out for more than a few weeks, according to Edmunds.com. Nissan spokesman Brian Brockman said a shipment of 600 brand new Leafs set sail for the US just prior to the earthquake, but a key pier that Nissan uses for exports was then swamped by the tsunami and more than 2,300 vehicles were destroyed.

Honda, the nation’s third-largest carmaker, estimated that they will reduce production for 16,600 cars and trucks and 2,000 two-wheelers, said Tomoko Takamori, a spokeswoman for the Tokyo-based company.

The automaker also said about 30% of the company’s 110 suppliers for its four- and two-wheeled vehicles based in the quake-hit area are finding it hard to resume operations anytime soon, according to The Wall Street Journal.

Honda’s manufacturing facility in the Mexico’s Jalisco state has also been suspended as the plant experiences low auto parts inventories due to the earthquake. The company has lowered its revenues guidance for the full fiscal 2011 based on lower outlook for unit sales in all the segments, wrote Zacks analysts.

Disruptions in the supply of Japanese components eventually would also affect Japanese-owned plants in the United States, known as transplants, said Itay Michaeli, an analyst at Citi Investment & Research Analysis. ”This is the notable risk to the U.S. industry,” he said.

General Motors (GM) became the first U.S. auto maker to close a factory because of the crisis in Japan. The automaker said it is halting some production at its Buffalo, N.Y., engine plant, and plans to idle a Shreveport, La., plant that builds small pickup trucks. GM cited short supplies for a Japan-made part it didn’t identify and didn’t say when it expected to restart production, said the Journal. GM is also temporarily laying off 59 of the 623 workers at the Tonawanda Engine Plant.

“The industry doesn’t know what’s going to happen next when you have a massive supply disruption like that out of Japan,” said Mark Reuss, General Motors’ North American president. “We’re going to be tested.”

But Moody’s says that US automakers could gain market share in the wake of the Japan disaster: “Given the Japanese manufacturers’ greater vulnerability to the Japanese supply chain, US automakers could gain modest market share, a credit positive.”

Toyota, Nissan, and Honda said car production in China was unaffected after the earthquake. CLSA Asia Pacific Beijing-based analyst Scott Laprise wrote in a note to clients: “Our past experience tells us the Japanese joint ventures in China keep little inventory to improve overall efficiency…This changed last year after the Honda parts factory went on strike.”

Source: Alacra Pulse, Detroit Free Press, Bloomberg, Wall Street Journal, The Street, Car Trade India, The Detroit News, AFP, USA Today, Zacks, Associated Press.

Ford: Momentum Building for UAW Deal

As of yesterday, it looked like Ford’s (F) contract with the UAW could be destined for failure, as the vote stood 3,915 to 3,256 in favor of the “no” voters. But the momentum appears to have shifted in voting today.

As of 11:30 a.m., however, 6,271 workers had voted to ratify the contract, while 6,085 had voted against the contract, a 50.8% to 49.2% split. If more than half of the union members vote against the contract, the UAW may strike.

There’s a spirited discussion going on about the contract on the UAW facebook page. Many of the big votes are expected to come this weekend.

Dell: Still Not For Growth Investors

For years Dell (DELL) has been stuck in the shadows of its larger rival, HP (HPQ). But as HP stumbles from crisis to crisis, Dell has been humming along, slowly but surely transforming itself from a commodity PC vendor to a tech hub. In this article, we will profile Dell and allow readers to determine if Dell is the right stock for them.

Dell, named after its founder and current CEO Michael Dell, sells computers and other technology products across the world. For years the company has toiled in the shadows of HP. But this year HP has shown remarkable incompetence, resulting in a devastating drop in the stock price of one of America's blue chip companies.

click to enlarge images

HP has lost nearly half its value over the past year, while Dell has posted a gain of nearly 16%. Because Dell and HP are competitors in so many markets, they are exposed to the same macro-economic forces, so if one suffers more than another, they cannot blame it on macro-economic conditions. HP has failed to execute in almost every business it is in and, as a result, the shares are valued at an all time low P/E. However, companies with low P/E ratios are often valued there for a reason, RIM (RIMM) being a prime example. We are not considering HP because there is just far too much uncertainty there, with the exorbitantly overpriced acquisition of Autonomy and the appointment of Meg Whitman as CEO.

Dell, however, has many attributes that set it apart from HP, making it appealing for some investors to consider. Dell has been diversifying away from the PC business but in a controlled manner, unlike HP, which simply announced it will be looking how to exit the business. Dell acknowledges that its consumer business is weak, with Brian Gladden, Dell's CFO, openly stating that "consumer revenue was up 1% to $2.9 billion, driven by strong growth in EMEA and APJ, whereas Americas revenue declined."

Dell does not hide the fact that its PC business is withering in the face of Apple's (AAPL) transformative products. And Apple's results show that the problem is not with personal computers. The problem lies with non-Apple computers. Dell realizes this and its revenue base has been diversified to address these challenges. Dell, like Oracle (ORCL) has traded revenue for profitability, with its CFO stating that "as part of our strategy, we continue to make deliberate decisions to eliminate low value-added [products with low profitability] from the portfolio." Dell has showed discipline in improving margins and profitability.

A counter-point to this is that Dell must invest aggressively and acquire companies if it is to fend off the endemic threats to its PC business. Credit Suisse, for instance, notes that Dell's expenses will have to grow at a time when headwinds threaten the company. It fears that margins have peaked. We do note these concerns, but would like to point out to potential Dell investors that this is a long-term story, and Dell must atone for the sin of being in the PC business by paying to grow faster in other sectors.

But at least Dell is doing something about the problems it faces. HP has done nothing to solve the structural challenges facing the company. Dell now receives half of its revenues outside the US, and although the shift from reselling products from vendors such as EMC (EMC) to selling its own wares will cause short-term sales declines, it is important to note that even though Dell has cut its revenue outlook for this fiscal year from 5-9% down to 1-5%, it has raised its operating income growth expectations to 17-23%, from 12-18%.

Finally, Dell has one more appealing feature, and it is one that HP can only dream of. Dell has a pristine balance sheet, with $8.4 billion in net cash, which makes up nearly 32% of its market capitalization. HP, on the other hand, has nearly $13 billion in net debt.

Dell has shown an eagerness to use this cash to acquire companies necessary for its transformation. And, unlike HP, it has a far better track record of paying the correct price for an acquisition. In addition, Dell has also been buying back shares.

In conclusion, we think Dell can be a good value play for investors willing to wait it out as Dell slowly but surely diversifies away from the PC business. We will be blunt and say that investors looking for growth and peace of mind can go elsewhere, to companies such as Apple and EMC, both of which we own.

Given our more aggressive growth-oriented approach, Dell's turnaround story is too slow for us. However, Dell is tremendously undervalued, given that nearly a third of its market capitalization is in cash. For investors willing to wait it out as Dell turns itself around, this company could very well be a worthwhile investment.

Disclosure: I am long EMC, AAPL.

Your ETF Choices Can Do Better Than The Indexes

By Peter Pearce

This article is part of a series exploring the myths in popular investing as exposed in Michael Dever’s new book, “Jackass Investing.” In the book, Dever uses experience from three decades of hedge fund management to explore how the conventional wisdom in investing and portfolio management preaches little more than gambling. For an introduction to the series and the book, see our previous article looking at the return drivers for stocks.

Myth #4 of the book takes aim at the myth that a “Passive” investment style beats an “Active” one. If you’ve read a personal finance blog or article in the last decade, you’ll definitely have heard this myth repeated. A passive investing strategy is one where the investor purchases “representative” broad-market indexes to match as closely as possible the return of the overall stock market. One of the reasons index investing has become so popular is because it is cost efficient and simple. Index funds simply track and invest in whatever companies are in the index, so there’s no need to do any real investigation into the best stocks or sectors.

Indexes are an attractive solution to the investment needs of the majority of individual investors because only the largest accounts are able to diversify across the hundreds of stocks necessary to offer true index-like diversification. However there are a number of problems with using “representative” indexes. Most fundamentally, they are not designed to allocate to stocks that have characteristics that indicate an ability to produce higher returns. For example, the S&P (SPY) itself states, “Additions to and deletions from an S&P equity index do not in any way reflect an opinion on the investment merits of the companies concerned.” Second, some have unusual biases because of the way they are constructed, which I will demonstrate later in this article. Dever captures the irrationality of investing in “representative” indexes quite well with, “Why would a person subrogate their investment process to an index rather than manage their portfolio themselves pursuant to some clearly defined, objective, profit motivated, systematic and repeatable set of rules?”

The major index providers began offering indexes with the goal of systematically maximizing returns by following a clearly-defined set of rules as an alternative to the “representative” index funds. We can think of these as Equal-Weighted and Fundamental index funds. We’ll divide our discussion into two of the most popular indexes, examining their drawbacks and alternatives.

Dow Jones Industrial Average

A Price-Weighted index is a stock index where each stock’s influence in the index is determined solely by its price per share. It’s one of the simplest types of index composition to wrap your head around. The prices of each stock in the index are added together and then the total divided by the total number of stocks. Stocks with a higher price are given more weight and will therefore have a greater influence on the performance of the index.

To get a better idea of how a price weighted index is calculated, consider this example. Imagine two companies A and B, which are identical in every way and have shares priced at $100. There is a price-weighted index based only on these 2 stocks, and since both stocks have the same price, each company would account for 50% of the weight of the index. Now imagine stock B undergoes a 10 to 1 stock split because management wants to make the stock price more attractive to small investors, and is now priced at $10. Stock A would now account for 91% of the value of the index while stock B accounts for only 9%. A 10% change in the price of stock A would change the value of the index by 9.1% while a 10% change in the price of stock B would only change the value of the index by 0.9%.

Since both companies are exactly identical, there is no rational investment strategy that could justify allocating more to one stock than the other yet this is exactly the method price-weighted indexes take in allocating your funds.

The Dow Jones Industrial Average (DJIA) is the most well known price-weighted index and a popular choice for many investors through the SPDR Dow Jones Industrial Average (DIA). The DJIA was originally created in the late nineteenth century when keeping the calculations simple was essential to updating the index regularly. Keeping computational mechanics simple is no longer an issue and subrogating the investment decision process to this arcane method is clearly inappropriate.

An Equal-Weighted index would be a more appropriate way to gain exposure. The stocks in these indexes are weighted equally so that a 1% move in any stock in the index has the same impact on the index as a 1% move in any of the other stocks.

There is not yet an Equal-Weighted DJIA index fund, but consider the Rydex S&P 500 Equal Weight ETF (RSP) that includes the same stocks that comprise the S&P 500 but weights them equally. When compared with “capitalization-weighted” indexes such as the S&P500, discussed below, equally-weighted indexes allocate less to large companies and more to smaller companies, which can have an ambiguous effect. They offer both: greater exposure to undervalued stocks, as the bottom deciles of the S&P 500 tends to outperform the top deciles, but also would result in faltering performance when large companies lead the market, such as the last half of the 1990s.

(Click charts to expand)

The second problem with the DJIA is its components are chosen more or less arbitrarily by the Dow Jones & Co to represent different industries, they are not chosen according to fixed or well-defined rules. Stocks are only added to the index if, in the words of Dow Jones Indexes, “the company has an excellent reputation, demonstrates sustained growth, is of interest to a large number of people and accurately represents the market sectors covered by the averages.” The analysts selecting stocks for inclusion in the index are not selecting those that they feel have the greatest appreciation potential!

Standard & Poor’s 500 Index

The S&P 500 is by far the most well known index in the world and has become the benchmark against which many stock portfolios are measured. It’s a capitalization-weighted index, which is one where funds are allocated relative to the size of the company, so that the largest companies have the largest impact on the index value.

The S&P500 has certain characteristics that a stock must possess to be added to the index, for example: market capitalization above $4 billion, public float above 50%, and at least 250,000 shares traded in each of the six months prior, among other conditions. Once a stock has been included in the index, it may violate the conditions and not be deleted from the index if S&P decides the violation to be temporary. Over the last decade, the composition of the index has changed to the tune of 6.1% portfolio turnover. Just over 300 stocks were deleted from the index in order to keep the composition in line with the rules above. So ultimately the composition of the S&P 500 is not passive, it’s a subjective compilation of 500 stocks that might or might not fully adhere to the conditions outlined. This brings up the same question that we asked about the Dow Jones: Why bias the weighting of your portfolio to a characteristic, in this case company size, which does not point to an ability to achieve higher returns?

Compare the allocation of the S&P500 to another index for example. The PowerShares FTSE RAFI US 1000 Index (PRF), which consists of 1,000 U.S listed companies and is weighted to those with the largest fundamental values. Weighting factors include dividends, book value, sales and cash flow. Instead of simply “representing” the U.S large cap market, the index systematically tries to reduce exposure to overvalued stocks. Fundamental index strategies add value by dynamically tilting the allocation against overbought stocks, essentially betting against momentum. When value stocks are out of favor, they increase their allocation to them, and when value is in favor, the index tilts less weight towards these stocks because of their higher price. This type of index rebalances out of popular stocks and into unpopular ones.

As a final note, consider the Guggenheim Insider ETF (NFO) as another alternative to typical “representative” indexes. The Insider index tracks the performance of the Sabrient Insider Sentiment Index, which consists of 100 stocks that are selected to be purchased based on insider trading trends and increases in analysts’ earnings estimates. The thinking here is that corporate insiders know more about its prospects, so increased purchasing by these “insiders” serves as a positive signal for a stock price. The returns of the Guggenheim Insider ETF are a result of a selection process that creates an index composed of stocks based on characteristics that are statistically likely to result in market outperformance.

The goal is to identify a subset of stocks from within a traditional broad-based index that exhibit characteristics that indicate the greatest appreciation potential. This type of approach provides the potential to generate higher long-term returns compared with market-cap-weighted indexes. Other fundamental indexes might have the goal of risk containment such as the Guggenheim Defensive Equity ETF (DEF).

Fundamentally-based ETFs have been available since 2005, and there are many other examples. These ETFs have principally focused on those selecting companies on the U.S. indexes for investment. Myth #16 in the book addressed how familiarity bias often keeps investors from diversifying their portfolio and exposes them to unnecessary risks. Though none of the ETFs mentioned here allows short-selling as a strategic return driver, our article on myth #10 explicitly shows how short-selling gives small investors the edge over some large institutional players.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional Disclosure: This series has been written on a contracted basis with the book's author. The opinions expressed in the article are those of Efficient Alpha and not necessarily those of the book's author. Efficient Alpha has been contracted to describe strategies and concepts used within the book but not to promote or recommend any strategies, the author, or the author's services.

Polaroid goes digital with Android camera

LAS VEGAS (CNNMoney) -- Iconic film company Polaroid is determined not to get left behind in an increasingly digital age. A new Android-powered point-and-shoot camera is part of that reinvention.

CNNMoney checked out the Polaroid SC1630 Smart Camera at the Consumer Electronics Show last week in Las Vegas. The camera features a 3.2-inch touchscreen and the full Android app market. It's a 16-megapixel camera with a 3x optical zoom, and it includes Wi-Fi and Bluetooth connectivity.

"Polaroid's heritage is in sharing," says Scott Hardy, president of Polaroid. "We were the original photography brand that had a sharing platform. You could take a picture and then instantly share it with someone."

Of course, these days "sharing" doesn't mean passing along an instant Polaroid snap; it means Facebook, Twitter, Tumblr and other social networks. The SC1630 uploads photos to those sites with a press of a button.

The camera's release date and price tag haven't yet been set.

With the release of the SC1630, Polaroid is banking on the viability of point-and-shoot cameras -- even as the landscape has changed. People are using smartphones for casual photography and instant online uploads. But Hardy says the SC1630's superior specs set it apart from phone photography.

He's similarly unruffled by the specter of fellow film icon Kodak's struggles to avoid bankruptcy. The difference between the two, Hardy says, is that Polaroid is "extremely healthy. The company has no debt and is backed by private investor groups.

"We have a healthy business model, which is the exact opposite of where Kodak is today," he says. "Kodak has a long row to hoe. Polaroid's already made that transition and has evolved past being a film manufacturer. We've bridged into the digital space."

Polaroid played up its new image by naming Lady Gaga to a creative director position in early 2010. She appeared at CES 2011 to unveil a three-product line called "Grey Label by Haus of Gaga."

The first product Gaga unveiled was the strangest: a pair of face-swallowing sunglasses called GL20 Camera Glasses. They would capture photos and video like a regular camera, then display them on the glasses' LCD screens for others to see. Photos could be sent to a printer via a Bluetooth connection.

The next two products felt more like traditional Polaroid, albeit with modern touches. First up: the GL10 Instant Mobile Printer, which printed 3x4 photos wirelessly from cell phones. Rounding out the trio was the GL30, an instant camera with a retro design that harkened back to the Polaroid cameras of decades past.

The Instant Mobile Printer went on sale in June 2011 for $170, and it's now available for $100. But the instant camera never came out, and neither did the Camera Glasses.

Hardy says the two products "are still under development. We want to do it right -- we want to get it perfect." 

Sirona Dental Systems Increases Sales but Misses Estimates on Earnings

Sirona Dental Systems (Nasdaq: SIRO  ) reported earnings on Feb. 3. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q1), Sirona Dental Systems beat slightly on revenue and missed expectations on earnings per share.

Compared to the prior-year quarter, revenue improved and GAAP earnings per share dropped.

Margins dropped across the board.

Revenue details
Sirona Dental Systems logged revenue of $258.1 million. The 13 analysts polled by S&P Capital IQ expected revenue of $254.3 million. Sales were 9.5% higher than the prior-year quarter's $235.6 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS came in at $0.91. The 13 earnings estimates compiled by S&P Capital IQ predicted $0.92 per share on the same basis. GAAP EPS of $0.67 for Q1 were 11% lower than the prior-year quarter's $0.75 per share.

Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 53.8%, 150 basis points worse than the prior-year quarter. Operating margin was 21.0%, 280 basis points worse than the prior-year quarter. Net margin was 14.8%, 320 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $232.5 million. On the bottom line, the average EPS estimate is $0.69.

Next year's average estimate for revenue is $969.5 million. The average EPS estimate is $3.08.

Investor sentiment
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 106 members out of 119 rating the stock outperform, and 13 members rating it underperform. Among 38 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 35 give Sirona Dental Systems a green thumbs-up, and three give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Sirona Dental Systems is outperform, with an average price target of $53.85.

The healthcare investing landscape is littered with also-rans and a few major winners. Is Sirona Dental Systems performing well enough for you? Read "Discover the Next Rule-Breaking Multibagger" to learn about a company David Gardner believes will deliver amazing returns during the next few years. Click here for instant access to this free report.

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Carnival stock, profits hit from cruise disaster

NEW YORK (CNNMoney) -- Shares of Carnival plummeted in U.S. trading Tuesday after the cruise line operator said it may suffer a more than $100 million hit to its profit from the grounding of the Costa Concordia.

The accident on Friday has left at least 11 people dead after five more bodies were found Tuesday. More than 20 people are still missing as the ship lists on its side near the island of Giglio off the coast of Italy.

Shares of Carnival (CCL), the Miami-based parent company of Costa Cruises, which owns the ship, were down 14.2% in morning trading Tuesday, the first U.S. trading day since the Friday night accident.

Carnival released details of the financial costs in a statement Monday, adding that it is "deeply saddened by this tragic event."

The company said it has insurance policies for both damage to the vessel and personal injury liability for third parties. But there is a $30 million deductible on the damage policy and $10 million deductible on the personal injury policy.

In addition, the loss of use of the ship will likely cost the company between $85 million and $95 million during its current fiscal year, which ends Nov. 30.

"The vessel is expected to be out of service for the remainder of our current fiscal year, if not longer," said the company. "In addition, the company anticipates other costs to the business that are not possible to determine at this time."

Shares of Carnival rival Royal Caribbean Cruises (RCL) were down 3.7% in morning trading on investor fears that the accident could hurt demand for all cruises.

Analysts from Susquehanna Financial downgraded both cruise operators on Tuesday, while JPMorgan downgraded only Carnival.

JPMorgan analyst Kevin Milota wrote that this accident comes at a particularly bad time for the cruise industry, since the peak sales period runs from January through March.

"While an event like this is extremely rare in the cruise industry, we do think this will have an impact on bookings in the immediate term, in particular for the cruises that have yet to be booked," Milota wrote. 

Treasuries vs. Stocks: Running the Numbers

Ten-year U.S. Treasury notes were one of the best performers of 2011, returning more than 16%. The safety of an income stream and return of principal backed by the U.S. Treasury are attractive characteristics. However, with current coupon rates under 2% and recent inflation reported at over 3%, 10-year notes virtually guarantee a loss in purchasing power.

I've thought bonds have been overpriced for some time (and been wrong) and wanted to see how the prospects for 10-year Treasuries compare with some dividend-paying stocks. Since perceived safety is a key point for the government paper, the debt's competition will be the only four U.S. companies with something Treasuries lost last year -- a AAA rating from Standard & Poor's. The four contenders are listed below, along with some key information.

Company	Recent Stock Price	Dividend Yield	5-Year Dividend CAGR
Automatic Data Processing (Nasdaq: ADP  )	$54.40	2.9%	11.42%
ExxonMobil (NYSE: XOM  )	$86.02	3.5%	7.99%
Johnson & Johnson (NYSE: JNJ  )	$65.48	2.2%	8.73%
Microsoft (Nasdaq: MSFT  )	$27.40	3.1%	14.87%

Source: Yahoo! Finance and author's calculation. CAGR = compound annual growth rate.

The match-up
The Treasuries and company stocks were compared using the net present value of the investment, coupon or dividend payments and value at the end of 10 years. Since my crystal ball is a bit cloudy, the following assumptions were used to estimate the unknowns.

• Treasuries pay 2% and return full face value at maturity.
• Stocks pay their current dividend rate and raise the payment each year in the same quarter as the past several years. To be conservative, dividend hikes are assumed to be only 75% of the past five years compound annual growth rate.
• To be conservative, stock prices are assumed to be unchanged at the end of 10 years.
• Future values are discounted at the most recent consumer price index rate reported by the Bureau of Labor Statistics, 3.4%.

Results
No surprise that that Treasuries lose purchase power with the yield below inflation, but it may be surprising to some that all four stocks beat the notes under these assumptions.

Investment	Change in Purchasing Power
10-year Treasury	(11.3%)
ADP	7.4%%
ExxonMobil	(3.5%)
Johnson & Johnson	11.8%
Microsoft	12.2%

Source: Author's calculation.

These aren't expected returns for the stocks, this scenario puts the brakes on dividend growth and stalls out the stock price. It's hard to imagine a scenario where these four stocks don't have some gain in share price over the next decade.

Even with the conservative assumptions, it isn't even close. In order for the worst stock return to be worse than Treasuries, Exxon's dividend growth rate would need to be half its recent track record, and the stock would need to fall by nearly 10% over the next decade. Possible? Sure, but not likely.

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Get Paid 36% To Buy Nvidia At A Steep Discount

Nvidia (NVDA) is a leading designer of graphics chips used in PC's, smartphones, tablets, and gaming consoles. Advanced Micro Devices (AMD) is the main competitor in the PC space, with companies like Intel (INTC), Qualcomm (QCOM), and Texas Instruments (TXN) competitors in the mobile space.

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NVDA data by YCharts

Nvidia currently trades at $12.59 per share. I recently wrote an article on Nvidia where I performed a discounted cash flow (DCF) analysis and concluded that Nvidia is undervalued. I estimated a fair value range of $16.89 - $21.16. The current stock price gives about a 25% margin of safety below the lower bound of my fair value range. Looking at the recent stock performance, shares of Nvidia have briefly dipped below $12 per share on a few occasions over the last year. Given that $12 represents a 29% margin of safety to my fair value range, this price seems like a natural entry point for this undervalued stock. But instead of simply waiting for the price to drop below this level, an alternative is to be paid to wait for the stock to drop below this level by selling puts.

Selling Puts

An option has three components: A strike price, a premium, and an expiration date. By selling a put option you are giving the buyer of that option the right to sell you the underlying stock at the strike price on or before the expiration date. The buyer pays you the premium in exchange for this right. You keep this premium no matter what happens, but are required to buy the stock if the option is exercised.

Selling a cash-covered put option can end in one of two ways. If the stock never dips below $12 per share before the expiration date the option will expire worthless, you will not be required to buy any shares, and you're free to write another put. If, however, the stock does go below $12 per share and the option is exercised, you are required to buy the stock at $12 per share, which will be higher than the current market value.

Let's take a look at the different put options available to sell at a $12 strike price:

Expiration Date (Days until expiration)	Strike Price	Premium (Last Trade)	Annualized Return
Jul 2012 (25)	$12	$0.30	36.5%
Aug 2012 (53)	$12	$0.59	33.9%
Sep 2012 (88)	$12	$0.80	27.7%
Dec 2012 (179)	$12	$1.32	22.4%
Jan 2014 (571)	$12	$2.51	13.4%

*Data as of June 25

The July 2012 expiration date provides the largest annualized return, receiving a $0.30 premium on a $12 investment, resulting in an annualized return of 36.5% (2.5% in 25 days) . So if you sell a July 2012 $12 put option you immediately receive a premium of $30 (all options are in blocks of 100 shares) and you have $1200 tied up for 25 days. If the option expires worthless you can then write another put and collect another premium. If the option is exercised you will buy 100 shares Nvidia for $12 per share, a price which you have already determined is a comfortable entry point.

The downside to this strategy is that if Nvidia tanks, say to $10 per share, you are forced to pay $12 per share and suffer an immediate "on paper" loss. Of course, had you simply bought shares at the current price or even waited for the price to reach $12 and then bought shares, you would have suffered the same fate. But by selling puts you are able to offset this "on paper" loss with premiums.

If you think that the stock will drop significantly below $12 per share, or if by the time this article is published the stock already has, another option is to sell a put with an $11 strike price instead. The August 2012 $11 put offers a premium of $0.30, yielding an annualized return of 18.8% (2.72% in 53 days), and the premium will only increase as the stock price decreases.

Conclusion

Nvidia is a seriously undervalued company, and selling puts at strike prices which offer a substantial margin of safety to fair value allows for an annualized return of up to 36.5%. The worst thing that can happen with this strategy is that you end up with shares of Nvidia for a price which you're happy with. Sounds pretty good to me.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Most Awkward Office Discussion: Relationships

Most workers have no problem discussing their careers or even their salaries with a boss, but when it comes to talking about romantic relationships, things get awkward.

Nearly a quarter of employees rated discussing a relationship with a significant other as the single most uncomfortable conversation topic to have with a boss, according to surveys of more than 800 employed Americans conducted by Adecco, a staffing firm. The touchy subject beat out discussions about politics, religion and even medical history as the most uncomfortable thing to talk to a supervisor about.

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By comparison, 16% of those surveyed said talking about political beliefs with their manager would be the most uncomfortable topic, and only one in 10 employees said discussing religion or their medical history would be the most uncomfortable.Discussing matters such as politics, religion and physical appearance in the workplace has long been considered a taboo that could come back to haunt you, but as the survey shows, none of these topics are as sensitive to employees as mentioning a significant other in the presence of their boss.Indeed, the survey also found that nearly half of employees would feel awkward about going on a double date with their boss compared with just a quarter who would feel awkward about drinks with their boss one-on-one.Even after employees leave the workplace, they seem intent on preserving the boundary between their personal lives and their former bosses. When asked, 70% of those surveyed said they were not connected to any of their ex-bosses on social networks such as Facebook and Twitter.While this might make sense for an employee who is eager to stop a superior from finding out intimate details of his or her life, staying connected to former employers online and offline could prove to be a valuable way to network. Besides, anyone who is nervous about revealing personal details to a boss can simply connect with them on LinkedIn. How often does anyone discuss their significant other on that site?Follow TheStreet.com on Twitter and become a fan on Facebook.

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Microsoft Invests Millions in Innovative Teaching Practices Research

By Robin Wauters

Microsoft (MSFT) Tuesday announced that its Partners in Learning program is sponsoring the Innovative Teaching and Learning (ITL) Research project, which is led by non-profit R&D organization SRI International.

The global research program intends to “broadly investigate” the effects that information and communications technology has in transforming teaching and learning at the school and education system level. Microsoft says it will invest $1 million annually in the multi-year study in partnership with the governments of Finland, Indonesia, Russia and Senegal.

The primary focus of this research, which is being guided by outside advisors from the OECD, UNESCO, the World Bank, the International Society for Technology in Education and other organizations, is to assess teachers’ adoption of innovative classroom teaching practices and the degree to which those practices provide students with personalized learning experiences.

This will complement the Assessment and Teaching of 21st Century Skills (ACT21S) research that Microsoft announced on Monday, which focuses primarily on identifying what it refers to as ’21st century skills’, and developing ways to measure them by providing new methods of assessing students. The ACT21S research was developed through a collaboration between Cisco (CSCO), Intel (INTC) and Microsoft.

Teams of national researchers from universities, think tanks and other institutions will work with SRI International to conduct the research in each country. Methodologies, data and reports are open to researchers around the world, and will be free and publicly available each year (the first results are expected this summer and annually from then).

In addition, the research project will develop a set of evaluation tools that schools and education systems can adopt to measure their own progress.

Original post

Earnings Estimates For Financials

Below we highlight the change in consensus first quarter earnings per share estimates for the six largest US banks and brokers over the last six months. In each chart, the red line represents the consensus first quarter earnings estimate, while the blue line represents the stock price.

As shown, for Goldman (GS), JP Morgan (JPM), Citigroup (C) and Wells Fargo (WFC), we've actually seen first quarter earnings estimates increase over the past month. This is in stark contrast with prior quarters in which we've typically seen analysts continuously drop their earnings estimates for the financials leading up to their report dates. Goldman has seen the biggest increase in earnings estimates recently, from under $2.90/share in late February to nearly $3.50 today.

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While the four companies above have seen an uptick in earnings estimates recently, Morgan Stanley (MS) and Bank of America (BAC) are two that haven't really seen a pickup.

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Nothing Generic About Watson Stock

Pharmaceutical companies that sell generic drugs are trading at attractive valuations, offering investors a nice entry point, writes Bernstein Research analyst Aaron Gal in upgrading shares to Outperform. Watson is a little more expensive than rivals Teva Pharmaceuticals (TEVA) and Mylan (MYL), but is still “cheap” at 8 times 2014 earnings expectations.

Watson Pharmaceuticals (WPI) “looks like a solid grower in the next two years,” Gal writes. Most importantly, WPI agreed to buy Swiss rival Actavis earlier this year, bolstering its presence in Europe. That could give the company’s earnings a jolt.

“Assuming minimal internal growth of both Watson and the acquired business, Watson could grow its net income by $542M by 2015. Assuming the $542M are perpetuity and discounting it to present at a 5% rate suggests the deal will generate 67% return on investment. We note that applying a higher discount rate would make this deal unattractive with the value of the deal going negative between 7%-8% (it is amazing how much the current interest environment is altering economic incentives).”

Wells Fargo Adds $3.5M Morgan Stanley Team

As multi-year retention deals at the wirehouse firms wind down this month, movement between the major firms has been ramping up. On Wednesday, Wells Fargo Advisors (WFC) said a team from Morgan Stanley Smith Barney (MS) with roughly $3.5 million in annual fees and commissions and about $550 million in assets under management had joined it in the greater New York area.

The RDM/Dillon Group of Melville, N.Y., signed on with Morgan Stanley on Friday and now reports to Christopher Davis, the Long Island market manager for Wells Fargo Advisors. Its members include industry veterans Richard Ranieri, David Roberts, Michael Rosenberg and Tonia Dillon.

Ranieri has yearly production of $1.16 million and AUM of about $180 million; he has been in the industry for 28 years. Roberts’ earns annual fees and commissions of $1.17 million, has assets under management of $185 million and 19 years in the industry.

Team member Rosenberg’s yearly production is $617,000, his assets are $94 million, and he’s been in the business for 11 years. Dillon’s trailing-12-months fees and commissions are $542,000; she manages about $86 million and is a 28-year industry veteran.

As of Sept. 30, Wells Fargo Advisors had about 15,200 branded FAs vs. 17,300 at Morgan Stanley Smith Barney and 16,700 at Bank of America-Merrill Lynch (BAC). UBS Americas (UBS) includes some 6,900 advisors.

Other recent MSSB departures include Philip Holbert and Richard Nigro, who joined Baird in mid-November with a combined $180 million in assets under management. In early November, Raymond James Financial Services (RJF) attracted a Morgan Stanley team in Pennsylvania with annual production of roughly $1.15 million and client assets of about $155 million to its independent channel.

Apple Inc. (AAPL) Rumors and News – iPhone Antenna Press Conference Set

Here is today’s Apple Inc. stock news and AAPL rumors for Friday, July 16. Apple Inc. (AAPL) goes on the offensive in the aftermath of Consumer Reports’ review bashing its iPhone 4 and antenna problems, announcing a press conference later today. Apple also updated the operating system of both the iPhone 4 and the iPad today. Finally, a new MacBook Air might just join that rumored new iPod Touch this September:

Apple to Hold iPhone 4 Press Conference on Friday: It’s about time. Rather than continue to offer up lame duck solutions to the iPhone 4′s notorious antenna problems, AAPL has announced that they will hold a press conference to directly address the issues plaguing their new smartphone. It is assumed that Apple will announce a detailed plan that will solve consumer complaints with the recently released device. Analysts predict that Apple will either provide free protective cases to existing iPhone 4 owners, set up a plan to replace or repair launch iPhone 4 devices, or even announce a costly recall of the device. Apple is also expected to announce that future manufacturing runs of the smartphone will include a non-conductive coating applied to the device casing in the hopes of easing reception issues. Whether the press conference will be enough to allay AAPL shareholder fears that developed following a 4% dip in share price earlier this week remains to be seen. The press conference will be streamed live online starting at 10 a.m. PT on July 16.

Apple Set to Release 11.6-inch MacBook Air: Get ready to see a whole host of new AAPL products ready for the back to school season. DigiTimes analyst Mingchi Kuo says that Apple will release a brand new, smaller version of their MacBook Air laptop computer in August or September. The new MacBook Air will sport an 11.6-inch screen and the low voltage Intel Core processor. Kuo points to discussions with component makers as evidence of the new laptop’s impending release. The new MacBook Air will be joined by the rumored new iPod Touch, which is said to be launching in the same window. The new iPod Touch will feature a 3-megapixel camera and other features to bring the media player more in line with the iPhone 4.

Apple Releases iOS Updates for iPhone 4 and iPad: Following up on their promise for a patch, AAPL has released an updated version of the iPhone 4′s operating system. iOS 4.0.1 features just one major fix, namely a corrected formula on how many signal strength bars display on the iPhone 4′s screen. Apple announced in a message on their homepage that said formula was at least partially responsible for the iPhone 4′s reception issues. The new formula in iOS 4.0.1 is based on the one used by AT&T (T) in their other phones. Apple has also released an update to the iPad’s operating system. iOS 3.2.1 is a bit more robust than the iPhone’s update, including improved Wi-Fi connectivity, a fix for an issue that caused video playback to freeze, and improved video-out when using a VGA adapter among others. Apple has been promising to address the iPad’s Wi-Fi connectivity problems since just after the device’s launch, a possible indicator that it may be some time yet before we see a permanent solution to the iPhone 4′s reception problems.

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