Analyst Upgrades

• General Electric (GE) and Barclays (BCS) to buy from neutral at UBS.
• Warnaco (WRC) to outperform from market perform and Melco Crown (MPEL) to market perform from underperform at Wells Fargo.
• Parker-Hannifin (PH) and Emerson Electric (EMR) to buy from neutral at Goldman.
• AMD (AMD) to buy from neutral at Nomura.
• Novellus (NVLS) and Sherwin-Williams (SHW) to equal weight from underweight at Morgan Stanley.
• OpenTable (OPEN) to outperform from market perform at Morgan Keegan.
• Skilled Healthcare (SKH) to buy from hold at Jefferies.
• Lear (LEA) to overweight from equal weight at Barclays.
• Adobe (ADBE) to buy from neutral at BofA/Merrill.

The earnings crunch continues this week, and analysts surveyed by Thomson Reuters are anticipating lots of strong quarterly reports.

For example, year-over-year earnings growth from big oil Chevron (CVX), ConocoPhillips (COP), ExxonMobil (XOM) and Royal Dutch Shell (RDS.A) are expected to be in double digits. The same is true of many other energy and mining concerns reporting this week: Allegheny Technologies (ATI), Alliant Energy (LNT), Arch Coal (ACI), Cliffs Natural Resources (CLF), CMS Energy (CMS), CONSOL Energy (CNX), DPL (DPL), Hess Corp. (HES), Minerals Technologies (MTX), Pioneer Natural Resources (PXD), PPL Corp. (PPL), Southwestern Energy (SWN), Total (TOT), Whiting Petroleum (WLL), Williams Companies (WMB) and Wisconsin Energy (WEC).

After a horrible 2009, this year is shaping up much better for the semiconductor operators. Just look at Novellus (NVLS). In its latest quarterly report, the company beat expectations as the stock price is up over 3% to $27.47. Actually, the stock has roughly doubled over the past year. And in light of the rebound in the market, the momentum is likely to continue.

The new earnings season kicks off when Alcoa Inc. (AA) releases its second-quarter results Monday. Analysts surveyed by Thomson Reuters on average expect Alcoa to report that it swung to a profit from a year-ago net loss.

Intel Corp. (INTC) is likewise forecast to have swung into positive territory, while Google Inc. (GOOG) and JPMorgan Chase & Co. (JPM) are expected to be among the week's biggest earnings gainers.

After the closing bell sounded yesterday, Novellus Systems (NASDAQ: NVLS) reported a second-quarter loss, thanks to falling semiconductor sales stemming from general weakness in the semiconductor sector.

The firm reported a second-quarter net loss of 52 cents per share, or 41 cents per share excluding items. Although this loss was three cents wider than the consensus estimate, the shares managed to bounce off their after-hours lows -- thanks mainly to NVLS's forecast.

Analyst upgrades:

• JP Morgan upgraded J.C. Penney (NYSE: JCP) to Neutral from Underweight based on lower input costs, stabilization in home, lower markdown dollars, and valuation.
• Oppenheimer upgraded Novellus (NASDAQ: NVLS) to Perform from Underperform as it believes Novellus' market share has stabilized and that the company is a potential acquisition target. The firm raised its price target to $20 from $9.
• Bernstein upgraded ConAgra (NYSE: CAG) to Market Perform from Underperform citing strength in grains and moderating input costs.
• ConocoPhillips (NYSE: COP) was raised to Buy from Neutral at Goldman.
• China Housing (NASDAQ: CHLN) was upgraded to Buy from Hold at Roth Capital.

The earnings crunch begins in earnest this coming week, with companies from Johnson & Johnson (NYSE: JNJ) and PepsiCo Inc. (NYSE: PEP) to Southwest Airlines Co. (NYSE: LUV) and Harley-Davidson Inc. (NYSE: HOG) scheduled to report results for the quarter just ended. But with the ongoing turmoil in the markets, much attention is on the tech and financial sectors. This week will provide plenty to mull over on both counts.

Wall Street expectations for tech stocks are fairly optimistic. Analysts surveyed by Thomson Financial are looking for chip maker Altera Corp. (NASDAQ: ALTR) and software/service company iGate Corp. (NASDAQ: IGTE) to be the sector's biggest earnings gainers of the week. Altera is expected to report earnings of 30 cents per share (up 33.3% from a year ago) on revenue of $355.1 million. Altera had previously forecast flat sales for the quarter, and shares fell to a 52-week low last week. iGate is expected to report earnings of 14 cents per share (up 42.9%) on revenue of $55.6 million. India-based iGate recently spun off its Mastech consulting services. Shares are down 45.0% in the past three months, and also reached a new 52-week low last week.

San Jose-based Novellus Systems Inc. (NASDAQ: NVLS), on the other hand, is expected to report that net income tumbled 90.4% from a year ago to 4 cents per share, on revenue of $245.6 million. Novellus fell to a 52-week low early last week, and shares are down 44.5% year to date.

As the second quarter earnings crunch begins in earnest this week, the bear market has investors jittery and prognosticators spinning out dire warnings. In the wake of mixed results from Alcoa (NYSE: AA) and General Electric (NYSE: GE) kicking things off last week, here's a look at what Wall Street is expecting from many of the companies scheduled to report this coming week.

Analysts surveyed by Thomson Financial are expecting the following companies to report a rise in earnings when compared to the same period of the previous year.

• Nucor Corp. (NYSE: NUE): $1.80 EPS (36.6%) on sales of $6.4 billion (+53.0%)
• Google Inc. (NASDAQ: GOOG): $4.74 EPS (24.9%) on sales of $3.9 billion (+41.6%)
• Nokia Corp. (NYSE: NOK): 56 cents EPS (23.2%) on sales of $19.9 billion (+17.8%)
• CSX Corp. (NYSE: CSX): 90 cents EPS (21.1%) on sales of $2.9 billion (+12.8%)
• Altera Corp. (NASDAQ: ALTR): 27 cents EPS (18.5%) on sales of $346.7 million (+8.4%)
• IBM (NYSE: IBM): $1.82 EPS (+17.6%) on sales of $25.9 billion (+9.0%)
• eBay Inc. (NASDAQ: EBAY): 41 cents EPS (17.1%) on sales of $2.2 billion (+18.0%)
• W.W. Grainger Inc. (NYSE: GWW): $1.46 EPS (17.1%) on sales of $1.7 billion (+8.0%)
• Microsoft Corp. (NASDAQ: MSFT): 47 cents EPS (17.0%) on sales of $15.7 billion (+17.0%)
• Honeywell International Inc. (NYSE: HON): 94 cents EPS (17.0%) on sales of $9.2 billion (+7.9%)

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

• Acuity Brands Inc. (NYSE: AYI) beat second-quarter estimates on increased productivity and new products.
• Advanced Micro Devices (NYSE: AMD) cut its outlook and announced job cuts.
• Alcoa Inc. (NYSE: AA) missed first-quarter earnings estimates but beat revenue expectations.
• Circuit City Stores Inc. (NYSE: CC) surprised Wall Street by posting a second-quarter profit.
• Dell Inc.'s (NASDAQ: DELL) rosy 2008 forecast is based on cost cuts, overseas growth, share buybacks.
• DuPont & Co. (NYSE: DD) raised its first-quarter outlook on strength in agriculture and emerging markets.
• Eastman Chemical Co. (NYSE: EMN) raised its first-quarter guidance on strong sales and higher prices.
• EXFO Electro-Optical Engineering (NASDAQ: EXFO) beat estimates and announced an acquisition.
• Foundry Networks Inc. (NASDAQ: FDRY) slashed its first-quarter outlook, blaming the weak economy.
• Genentech Inc. (NYSE: DNA) beat first-quarter earnings estimates, but not revenue expectations.
• General Electric Co. (NYSE: GE) missed earnings expectations and lowered its guidance.
• Novellus Systems Inc. (NASDAQ: NVLS) trimmed its first-quarter earnings and revenue forecasts.
• Progressive Corp. (NYSE: PGR) beat estimates though first-quarter profits fell due to lower premiums.
• Rite Aid Corp. (NYSE: RAD) swung to a loss in the fourth quarter on acquisition costs and a tax charge.

Monday August 27

• Shanda Interactive Entertainment Ltd (NASDAQ: SNDA) to report Q2 earnings; conference call at 9am.
• Landstar System Inc (NASDAQ: LSTR) to hold Q3 mid-quarter conference call at 2pm.

Tuesday August 28

• Corinthian Colleges Inc (NASDAQ: COCO) to report Q4 earnings; conference call at 12pm.

Wednesday August 29

• TiVo Inc (NASDAQ: TIVO) to report Q2 earnings; conference call at 5pm.
• Novell Inc (NASDAQ: NOVL) to report Q3 earnings; conference call at 5pm.

Thursday August 30

• Freddie Mac Corp (NYSE: FRE) to report Q2 earnings; conference call at 10am.
• Novellus Systems Inc (NASDAQ: NVLS) to hold Q3 mid-quarter conference call at 4:30pm.
• PDUFA Date for Tericia Inc (NASDAQ: TRCA) for Somatuline Autogel for acromegaly.

Friday August 31

• Blyth Inc (NYSE: BTH) to hold Investor Q&A conference call at 2pm.

This morning, Novellus Systems Inc (NASDAQ: NVLS) announced that it anticipates second quarter bookings, shipments, revenues and earnings per share to come in at the low end of the guidance range it previously provided on May 31st. The semiconductor equipment maker previously forecast Q2 results of 42c-45c/$410M-$420M vs. Reuters consensus of 44c/$415.61M.

The company, which makes equipment to help turn silicon wafers into computer chips, believes its earnings will be lower because of a weak semiconductor market. Novellus said theses industry declines will lead to cost cutting initiatives in the second half of the year, including a reduction in executive salaries for the rest of the year and company shutdowns in the third and fourth quarters.

Novellus is one company among several that have lowered expectations for the rest of the year. Due to a surplus in chips, companies have had to cut prices. Applied Materials Inc (NASDAQ: AMAT), for example, also predicts declines in global chip sales growth for the rest of 2007.

In the technology sector this morning, the profit warning from Novellus was offset by an upgrade of Intel Corporation (NASDAQ: INTC) by Lehman Brothers.

Here is a quick look at this upcoming holiday shortened week.

Monday May 28

• Markets closed for Memorial Day holiday.
• PDUFA date for MedImmune Inc's (NASDAQ: MEDI) sBLA for CAIV-T.

Tuesday May 29

• Cisco Systems Inc (NASDAQ: CSCO) to hold webcast at 4:30pm to discuss newly announced Mobility Solutions.
• Verifone Holdings Inc (NYSE: PAY) to report Q2 earnings; conference call at 4:30pm.
• BMC Software Inc (NYSE: BMC) to report Q4 earnings; conference call at 5pm.

Wednesday May 30

• Polo Ralph Lauren Corporation (NYSE: RL) to report Q4 earnings; conference call at 9am.
• ExxonMobil Corporation (NYSE: XOM) to hold shareholders meeting at 10am.

Thursday May 31

• Tiffany & Co. (NYSE: TIF) to report Q1 earnings; conference call at 8:30am.
• Costco Wholesale Corporation (NASDAQ: COST) to report Q3 earnings; conference call at 11am.
• Dell Inc (NASDAQ: DELL) to report Q1 earnings after market close.
• Novellus Systems Inc (NASDAQ: NVLS) to hold mid-quarter update conference call at 4:30pm.

Friday June 1

• Weyerhauser Company (NYSE: WY) to hold analyst meeting at 9am.

MOST NOTEWORTHY: CheckFree Corp (CKFR), Sprint Nextel Corp (S) and the semiconductor capital equipment sector were some of today's more noteworthy downgrades:

• Piper Jaffray downgraded Checkfree Corp (NASDAQ: CKFR) to Market Perform from Outperform after transferring coverage of the payment processor company.
• Sprint Nextel Corp (NYSE: S) was cut to Outperform from Strong Buy at Raymond James.
• Lehman cut the semiconductor capital equipment sector to Neutral from Positive, downgrading Cascade Microtech, Inc (NASDAQ: CSCD), Novellus Systems, Inc (NASDAQ: NVLS) and Teradyne, Inc (NYSE: TER) to Equal Weight from Overweight and cut Electroglas, Inc (NASDAQ: EGLS) to Underweight from Equal Weight.

OTHER DOWNGRADES:

• ThinkEquity cut Jones Soda Co (NASDAQ: JSDA) to Source of Funds from Buy based on valuation.
• Goldman is now cautious on the biofuel sector, downgrading the group to Cautious from Neutral.
• William Blair downgraded shares of Medimmune, Inc (NASDAQ: MEDI) to Market Perform from Outperform.
• Credit Suisse downgraded shares of Big 5 Sporting Goods Corp (NASDAQ: BGFV) to Underperform from Neutral citing valuation.
• Wachovia dropped Inkeepers USA Trust (NYSE: KPA) to Underperform from Outperform based on the acquisition from Apollo Investment Corp (AINV). Citigroup cut Inkeepers to Hold from Buy.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

Note: The Daily Option Update is provided by Options Specialist Paul Foster of theflyonthewall.com.

U.S. stocks closed mixed Monday, as General Electric Company (NYSE:GE) and Citigroup Inc. (NYSE:C) rallied to new multi-year highs. The Dow closed down -0.10%, NASDAQ 100 closed down -0.90%, and S&P 500 closed down -0.35%. The 10-year bond rate stood at 4.5870%. The CBOE VIX closed up 0.68 to 10.73.


Research in Motion Option Implied Volatility Increased To 59 Into Dec. 21 Earnings

Research In Motion (NYSE:RIMM) is expected to report EPS of 93 cents on December 21, 2006. Oppenheimer said "We rate the shares of RIMM Neutral, due to concerns over valuation and the potential long-term impact of competition in the smart phone segment. However, we expect that the company's November & February quarter earnings will be robust, based upon our recent channel checks." RIMM's overall option implied volatility of 58 is above its 26-week average of 41, according to Track Data, suggesting larger risks.


Harrah's Implied Volatility Collapses As Official Deal Announcement Nears

Dow Jones reported a source who indicated that Harrah's Entertainment Inc. (NYSE:HET) would accept a $90 share bid from private equity. HET overall option implied volatility 12 is below last week's level of 18 according to Track Data, suggesting decreasing price risks.


Option volume leaders Monday were: Novellus Systems (NASDAQ:NVLS), Altria Group Inc. (NYSE:MO), Oracle Corp. (NASDAQ:ORCL), and Harrah's.

Note: The Daily Option Update is provided by Options Specialist Paul Foster of theflyonthewall.com.

U.S. stocks rallied to another record high Friday as General Electric Co. (NYSE:GE) led the rally, closing at a 4 1/2- year high of $37.46. The Dow Jones rallied to another all-time record. The Dow closed up 0.23%, NASDAQ 100 closed up 0.14%, S&P 500 gained 0.10%, and the 10-year bond rate closed at 4.5970%. The CBOE VIX closed at 10.05.

Morgan Stanley's Option Implied Volatility Calm Into 12/19: EPS & Outlook

Morgan Stanley (NYSE:MS), which closed Friday down 34 cents to $79.46, operates its business through four segments: retail brokerage, asset management, institutional securities and the Discovery Card network with 50 million card members & 4 million merchant/cash access locations. MS is expected to report EPS of $1.77 on Dec 19. MS option implied volatility of 25 is near its 26-week average, according to Track Data, suggesting non-directional price risk.

FedEx Option Implied volatility Calm into 12/20: EPS & Outlook

FedEx (NYSE:FDX), which closed Friday up 9 cents to $115.06, is expected to report EPS of $1.75 on Dec. 20. FDX's earnings are expected to benefit from lower fuel prices, which have decline from near-record highs this summer. FDX January option implied volatility of 24 is near its 26-week average of 26, according to Track Data, suggesting non-directional price risk.

Novellus Implied Volatility Calm As Stock Rallies

Novellus (NASDAQ:NVLS), which closed Friday up 97 cents to $34.36, develops, manufactures, sells and supports equipment used in the fabrication of integrated circuits. NVLS January option implied volatility of 37 is near its 26-week average, according to Track Data, suggesting non-directional price fluctuations.

Option volume leaders Friday were: General Electric Co. (NYSE:GE), Research in Motion Ltd. (NASDAQ:RIMM), Cisco Systems (NASDAQ:CSCO), and Microsoft Corp. (NASDAQ:MSFT).