Analyst upgrades:

• Jefferies upgraded SAP (NYSE: SAP) to Buy from Hold on expectations license declines will trough in Q2 and margins will expand going forward due to cost control and price increases. The firm has a $46 price target on shares.
• BofA/Merrill upgraded STMicroelectronics (NYSE: STM) to Buy from Underperform on expectations the company will benefit from improving industry fundamentals in 2010.
• Citigroup upgraded Freeport McMoRan (NYSE: FCX) to Buy from Hold to reflect the firm's positive copper outlook, as well as valuation following the recent pullback in shares. The firm has a $58 price target on the stock.
• Phototronics (NASDAQ: PLAB) was upgraded to Buy from Neutral at UBS.
• Anglo American (NASDAQ: AAUK) was raised to Hold from Sell at RBS.
• Peabody Energy (NASDAQ: BTU) was upgraded to Buy from Neutral at Goldman.

Analyst upgrades:

• Citigroup upgraded Adtran (NASDAQ: ADTN) to Buy from Hold on expectations the company will benefit from the broadband Stimulus funds.
• Morgan Stanley upgraded Continental Airlines (NYSE: CAL) to Overweight from Equal Weight based on relative valuation and views the company as a "survivor." Additionally, the analyst lowered 2009 industry estimates but believes it is the last cut for the year and is incrementally more positive on the sector.
• Morgan Stanley also upgraded EXFO Electro-Optical (NASDAQ: EXFO) to Overweight from Market Weight based on valuation.
• Tata Motors (NYSE: TTM) was upgraded to Buy from Hold at Deutsche Bank.
• Ascent Solar (NASDAQ: ASTI) was upgraded to Neutral from Underweight at JP Morgan.
• Mechel Steel (NYSE: MTL) was upgraded to Neutral from Underperform at Credit Suisse.

After American Airlines parent AMR Corp. (NYSE: AMR) reported surprising first-quarter results today, eyes turn next to rival Southwest Airlines Co. (NYSE: LUV), which is scheduled to discuss its first-quarter results tomorrow, April 16, in a conference call at 11:30 AM ET with CEO Gary Kelly and CFO Laura Wright. You can catch the live webcast of the call on the company's website.

For the quarter that saw Southwest declare its 130th consecutive quarterly dividend and named by Fortune magazine as one of the most admired companies in the world, analysts polled by Thomson Reuters expect the Dallas-based airline to report a loss of $0.01 per share, compared to a profit of $0.06 cents per share in the same period of the previous year. Revenue for the quarter is expected to total $2.4 billion, 5.1% lower than a year ago. Southwest's earnings have beat estimates in the past five quarters, by as much as a nickel a share.

Alcoa Inc. (NYSE: AA) started off the new earnings season with disappointing results that helped to stifle the recent rally. Was that enough of a sign of what's to come? No, probably not. But the earnings reports start to fly in earnest this week, which should provide a more detailed picture of the state of things.

Analysts surveyed by Thomson Reuters anticipate that some of the biggest names will prove to be holding their own. Google Inc. (NASDAQ: GOOG) is expected to post a profit of $4.91 per share, marginally higher than a year ago, and Johnson & Johnson's (NYSE: JNJ) expected $1.22 per share profit is slightly lower year over year. Even Mattel Inc.'s (NYSE: MAT) estimated loss of $0.13 per share is the same as in the year-ago period.

Late Friday night, Southwest Airlines Co. (NYSE: LUV) reached a tentative agreement with the Transport Workers Union (TWU) Local 555, which represents 7,780 ground workers, including those employed in operations, on ramps, as well as freight workers. The deal comes after more than 13 months of negotiations.

The tentative deal, which has yet to be voted on by all TWU members, would run for three years, through June 30, 2011 (the current contract opened for changes on June 30 of last year).

Southwest Airlines Co. (NYSE: LUV) is spreading its wings to Boston's Logan International Airport beginning this fall, pleasing Red Sox fans (and New Kids on the Block stalkers). Previously, the closest LUV got to Beantown was Manchester, New Hampshire (about an hour's drive).

This latest announcement adds to the discount carrier's list of new destinations, which include Minneapolis (service beginning next month) and New York's LaGuardia (at which LUV will be taking over gates left vacant by bankrupt ATA Airlines).

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Advanced Micro Devices Inc. (NYSE: AMD) reported dismal Q4 results due to lower demand.
• AMR Corp. (NYSE: AMR) reported a bigger-than-expected Q4 loss, sending shares lower.
• Check Point Software Technologies Ltd. (NASDAQ: CHKP) earnings prospects led to an upgrade.
• eBay Inc. (NASDAQ: EBAY) posted Q4 and full-year results with increased revenue due to a stronger dollar.
• Google Inc. (NASDAQ: GOOG) reported strong Q4 numbers that beat analysts' expectations.
• International Business Machines Corp. (NYSE: IBM) reported better-than-expected Q4 and 2008 earnings.
• Lockheed Martin Corp. (NYSE: LMT) posted strong Q4 results but lowered its 2009 guidance.
• Northern Trust Corp. (NASDAQ: NTRS) shares surged after posting better-than-expected earnings.
• Regions Financial Corp. (NYSE: RF) reported a huge loss due to write-downs and offered a bleak outlook.
• Societe Generale said that it expects to have broken even in the final quarter of 2008.
• Southwest Airlines Co. (NYSE: LUV) posted its second straight quarterly loss due to fuel hedging costs.
• UAL Corp. (NASDAQ: UAUA) reported a huge loss on the erosion in value of oil hedges as prices dropped.
• Usana Health Sciences Inc. (NASDAQ: USNA) posted record Q4 results despite one-time charges.

For more highlights from this week, see Apple, Microsoft, GE, Johnson & Johnson, Harley Davidson and others

Analyst upgrades:

• ING believes BHP Billiton (NYSE: BHP) will grow through acquisitions and is in a good position relative to peers. Shares were upgraded to Buy from Hold.
  
• KeyBanc upgraded Kaman (NASDAQ: KAMN) to Buy from Hold based on valuation, higher foreign 2009 sales, and exposure to the military helicopter market, among other reasons.
  
• Merck (NYSE: MRK) was upgraded to Buy from Neutral at Banc of Amerca/Merrill on valuation.
• J Crew (JCG) was upgraded to Market Perform from Underperform at Keefe Bruyette.
  
• UBS upgraded Expeditors (NASDAQ: EXPD) to Neutral from Sell.
  
• CVB Financial (NASDAQ: CVBF) was raised to Hold from Sell at Sandler O'Neill.

Analyst downgrades:

• Morgan Stanley downgraded Petrobras (NYSE: PBR) to Equal Weight from Overweight and lowered their target to $25 from $26 based on valuation and high Street estimates given lower oil prices and weaker currency.
  
• CIBC downgraded Louisiana Pacific (NYSE: LPX) to Sector Performer from Outperformer. The analyst believes LPX may have to issue equity at these depressed levels given the tight credit markets and ongoing cash losses.
  
• Calyon downgraded Southwest Airlines (NYSE: LUV) to Sell from Underperform and lowered their target to $7 from $8. The firm recommends taking profits in Southwest due to unit cost challenges given slowing growth and its reduced fuel hedging program.
• CME Group (NASDAQ: CME) was downgraded to Market Perform from Outperform at Bernstein.
  
• Keefe Bruyette downgraded shares of Amcore Financial (NASDAQ: AMFI) to Market Perform from Outperform.
  
• Anglo American (NASDAQ: AAUK) was downgraded to Hold from Buy at Royal Bank of Scotland.

Analyst initiations:

• Citigroup believes MasterCard (NYSE: MA) is vulnerable to the consumer spending slowdown and expects a more cautious outlook from management when the company reports earnings. Shares were initiated with a Sell rating and $110 target.
  
• Janney Montgomery initiated GameStop (NYSE: GME) with a Buy rating and $34.50 target and expects GameStop to benefit from the secular growth in gaming, potential hardware cuts, international expansion, and 2009 title visibility.
  
• Jefferies assumed Chicago Bridge & Iron (NYSE: CBI) with a Hold rating and $13 target and expects shares to be range-bound until the company shows progress on project execution and margin performance.
• Gran Tierra Energy (GTE) was initiated at Wunderlich with a Buy rating.
  
• Coverage of CME Group (AMEX: CME) was resumed with an Underweight rating at JP Morgan.
  
• Shanda (NASDAQ: SNDA) was initiated with a Hold rating and $30 target at Roth Capital.

Today was just another one of those days that shows you why it is hard to have any solid conviction right now. The jobs numbers matched the highest report of new unemployment benefits of last month, and that is a high back to 1982. Housing starts are also non-existent. Throw in a technology earnings disaster and a financial firm hatred on all but a few companies, and you are back to the urge to go drink rot-gutt booze with the homeless. Here are today's unofficial closing bell levels:
DJIA: 8,120.81 (-1.30%)
S&P500: 827.38 (-1.53%)
NASDAQ: 1,465.49 (-2.76%)
Top Analyst Upgrades
Top Analyst Downgrades

Apple Inc. (NASDAQ: AAPL) was one of the few tech gainers after the company significantly beat earnings. It even had its first $10 billion revenue quarter. The guidance was soft, but Wall Street is still taking the history of being overly conservative as the norm. Shares were up 7% at $88.96 right before the close.

Microsoft Corp. (NASDAQ: MSFT) was one of today's big disappointments. The company released earnings early, and the conference call comments outlined it all. Shares were down 11% to $17.13 right before the close. Count that as a new 52-week low. And a multi-year low.

Southwest Airlines, Inc. (NYSE: LUV) managed to post solid earnings yet again with earnings at $0.08 EPS against estimates of $0.05. What is interesting is that it has lowered its fuel hedging ahead as it sees a prolonged bear market in oil prices. Shares rose almost 18% to $9.84 right before the close.

Citigroup Inc. (NYSE: C) was a head scratcher for most as the company managed to name Dick Parsons as non-executive chairman of the board. Many feel this is a "zero-change" policy from the company. Shares were down another 14% at $3.14 right before the close.

Seagate Technology (NYSE: STX) fell after posting losses and guidance for more weakness ahead. No recovery in sight is its message. Shares were down a sharp 25% at $3.19 before the close, and that is a new multi-year low.

eBay Inc. (NASDAQ: EBAY) fell sharply and the losses held after the online auction giant posted a drop of 31% in earnings and its first time that it has seen a revenue decline. Shares were down a sharp 13% at $11.56 right before the close.

Southwest Airlines (NYSE: LUV) is famous for making a profit every year since it got started in the 1970s. Given the billions that the airline industry has lost in the last several years, that's quite a feat. And I've posted about how Southwest has been able to sustain that superior performance. But now Southwest's streak could be in danger.

How so? Southwest lost $56 million in its fourth quarter -- its second in a row, because it bet that the price of jet fuel would continue to climb. Southwest had to post cash collateral after jet fuel fell 65% in 2008's second half to less than the rates in its contracts. Southwest reduced most of these fuel hedges in December. Southwest also cut its plans to expand in 2009 -- it will pull 15 aircraft from flying this year as it adds 13 new planes, and it will delay some 2010 deliveries.

But here's the good news -- Southwest made a profit of 8 cents a share excluding $117 million in costs related to fuel hedging -- 3 cents a share above the 5 cents analysts had expected it to earn. But the question that remains for Southwest shareholders is whether it will make a profit in 2009. The answer depends on whether it can cut back on capacity to match lower demand in an economic downturn and whether its fuel hedges will make or lose money for Southwest.

That market may be betting that it can keep its streak going. Its stock is up 6.4% in pre-market.

Visit AOL Money & Finance for more earnings coverage.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

Southwest Airlines Co. (NYSE: LUV) is scheduled to discuss fourth-quarter 2008 results this morning in a conference call at 11:30 AM Eastern. The call will be hosted by Gary Kelly, chairman of the board, president, and chief executive officer, and Laura Wright, senior vice president, finance, and chief financial officer. To listen in to the webcast, see Q4 2008 Southwest Airlines Financial Results Conference Call.

Analysts surveyed by Thomson Reuters expect Southwest to report a fourth-quarter profit of $0.05 per share, compared to $0.12 per share in the year-ago period. Revenues for the quarter are expected to be 6.4% higher than a year ago to $2.7 billion. Southwest earnings have topped estimates in the past five quarters, by as much as 5 cents per share.

For the full year, analysts expect a $0.37 per share profit (-39.3%) and revenue of $11.0 billion (+11.0%).

The consensus long-term EPS growth forecast is 10.0%. The share price is 30.6% lower than it was a year ago.

See BloggingStocks' Southwest Airlines coverage for more information about the Dallas-based company.

Visit AOL Money & Finance for more earnings coverage.

Since August 2007, the Fed has cut its Fed funds rate from 5.25% to 0.25%. So shouldn't the cost of borrowing be down 5% as well? At first glance you might think that the cost of corporate borrowing would be down right along with the Fed funds rate. But rather than dropping 95%, the cost of borrowing for even the most credit worthy companies has nearly doubled. That matters because companies are likely to try to borrow $700 billion in 2009. And therein lies the reason that the Fed has no power to fix what ails us.

Here are two examples:

• Southwest Airlines (NYSE: LUV) , the only investment grade rated airline, raised $400 million in bonds in December 2008 to cover its losses from betting that fuel costs would stay high. Rather than paying the roughly 6% it had paid in 2004 to raise $350 million when the Fed funds rate ranged between 1.25% and 2.25%, Southwest had to put up 17 of its Boeing (NYSE: BA) jets as collateral and pay interest of 10.5% percent, nearly double the rate it had paid in 2004.
• Nabors Industries (NYSE: NBR), an oil services company, issued $1.1 billion in 10-year bonds in early January 2009, agreeing to a 9.25% -- in January 2008 when oil prices were rising, Nabors paid a mere 6.15% to borrow $975 million.

Why are companies paying more to borrow even though the Fed has slashed its short-term rate to near zero?

I think it's fair to say that there's much trepidation about the earnings season that picks up steam this week. And for better or worse, numbers from the big financials have begun to roll in. Last week we saw profit sink for JPMorgan Chase (NYSE: JPM) and significant losses from Bank of American Corp. (NYSE: BAC), Citigroup Inc. (NYSE: C), and Deutsche Bank (NYSE: DB).

Analysts surveyed by Thomson Reuters expect Bank of New York Mellon Corp. (NYSE: BK) to be among those financials reporting fourth-quarter earnings growth this week. They anticipate that Bank of New York will post a profit of $0.70 per share, compared to $0.67 per share a year ago and $0.72 in the previous quarter. Revenue is expected come to $3.8 billion, about the same as it was a year ago. Bank of New York has fallen short of earnings estimates in two of the past five quarters, by as much as 11.1%. For the full year, analysts are looking for $2.78 per share (+5.8%) on $14.8 billion (+4.2%). The consensus recommendation of analysts is to buy BK, and the long-term EPS growth rate forecast is 10.7%. Shares are 48.7% lower than a year ago. Other financials expected to report quarterly earnings growth this week include SunTrust Banks Inc. (NYSE: STI) and M&T Bank Corp. (NYSE: MTB).

This post is part of a feature on companies and products that our bloggers think are in need of a makeover. See all 26.

This summer I had the misfortune of flying AMR Corp.'s (NYSE: AMR) American Airlines. In my experience, it ranks near the top in its expression of contempt for its customers. As I wrote in my book Value Leadership, it is almost the opposite of Southwest Airlines (NYSE: LUV), which has tarnished its flawless image with its first quarterly loss in 17 years due to a $247 million charge resulting from a jet fuel hedge gone sour. But to give American Airlines a makeover, it would be wise to borrow selectively from what makes Southwest so great.

In August, I was scheduled on a 1:50 pm flight from Boston to Miami -- trying to get a connecting flight to Chile on its excellent airline, LAN Air. American Airlines said the flight would be delayed for 15 minutes because of a mechanical problem that caused the air-conditioning in the back of the plane not to work. Half the plane got out, and an hour later American Airlines announced an indefinite delay.

A big line formed at our gate to rebook. Next to our gate was an empty one with two American employees who were working on their computers. I waited patiently until one of them finished her work and asked if she could help me. She stared at me and said no, she could only help people on the flight scheduled for that gate, and went back to her computer. No thanks to her I ended up booking a flight that left at 6 pm, causing me to miss my connection to Chile.

Analyst upgrades:

• Baird upgraded Dicks Sporting Goods (NYSE: DKS) to Outperform from Neutral based on valuation.
  
• Home Depot (NYSE: HD) was raised to Market Perform from Underperform by Morgan Keegan.
  
• Southwest Airlines (NYSE: LUV) was upgraded to Outperform from Market Perform by Avondale.

Analyst downgrades:

• BMO Capital downgraded Hasbro (NYSE: HAS) to Underperform from Market Perform due to valuation and macro headwinds.
  
• UBS dropped Darden Restaurants (NYSE: DRI) to Neutral from Buy because of slowing casual dining trends.
• Goldman Sachs dropped Affiliated Computer (NYSE: ACS) to Neutral from Buy.
  
• Goldman also downgraded Automatic Data Processing (NYSE: ADP) to Neutral from Buy.

Analyst initiations:

• CIBC initiated Nortel Networks (NYSE: NT) with a Sector Performer rating based on what they see as the company's limited growth and margin prospects.
  
• Needham initiated Juniper (NASDAQ: JNPR) with a Hold rating, citing valuation.
  
• Blockbuster (NYSE: BBI) was initiated with a Hold by Needham, which would like to see if the company's turnaround is sustainable before becoming more constructive on the shares.