Tyson Foods (NYSE: TSN) really improved its fortunes in Q3. Last year at this time, Tyson earned 3 cents per share. This year, the food company, famous for its chicken brand, made 35 cents per share. Sales actually dipped a little under 3%, but management is diligently fighting the good fight when it comes to efficiencies. Both costs of sales and selling, general and administrative expenses went down.

According to Bloomberg, the adjusted income of 33 cents per share simply blazed past Wall Street's expectations. The call was for 22 cents per share. You've got to like that. Higher prices for poultry helped the quarter.

Tyson Foods (NYSE: TSN) is up 9% in early afternoon trading as I write this. The company's second-quarter earnings release is driving the buying. According to this article, Tyson reported an adjusted loss of $0.05 per share. The market was expecting a loss of $0.06 per share. So I guess the market was pretty happy about that.

Wall Street was probably encouraged by something else as well. If you take a look at the actual release, head on down to the statement of cash flows. Last year at this time, Tyson generated $144 million in cash from operations during the six-month period. This year, the company made $407 million from operations. Some nice changes in working capital helped out.

Tyson Foods, Inc. (NYSE: TSN) reported, according to this source, a decent quarter in terms of bottom-line profit, but it wasn't enough to satisfy Wall Street. Sales rose almost 10% to $7.2 billion. And net income on an adjusted basis came in at $0.15 per share. That represented pretty good growth over last year's profit figure. But you know, it didn't really matter for two reasons. One, the call by the analyst community was for four more pennies. Two, guidance was not tasty at all. Management sees further pressures coming, and the aforementioned source mentions that the fulfillment of debt obligations is an issue.

A tough environment for chicken has been plaguing Tyson. Not only that, but a look at the company's press release shows that operational cash flow took a huge dive over the last twelve months, dropping roughly 58% to $288 million. There was no free cash for the year to support the dividend obligations. That isn't too encouraging.

The bottom line on Tyson, which competes with the also-struggling Pilgrim's Pride (NYSE: PPC), is that it isn't a buy, at least not from where I sit. I know there will be investors out there who will see some value in the situation, but I cannot, at least not at this time. No, I'm not saying that I think Tyson will disappear. However, there are better ideas out there if you're looking to play the supermarket game over a long-term basis. There's Procter & Gamble (NYSE: PG), Kraft (NYSE: KFT), and Campbell Soup (NYSE: CPB), to name some examples. As I write this, Tyson's stock is down over 11%. Might we see a bounce in the next few days? Sure. But I'm not brave enough to step in with this one.

Disclosure: I don't own any company mentioned; positions can change at any time.

Analyst upgrades:

• Keefe Bruyette upgraded shares of AllianceBernstein (NYSE: AB) to Outperform from Market Perform as they find AB's risk/reward attractive given its attractive long-term business model. Wachovia upgraded Watson Pharma (NYSE: WPI) and Teva Pharma (NASDAQ: TEVA) to Outperform from Market Perform citing valuations and positive drivers for generics that include patent expirations and market share expansion.
• UBS raised Lloyds TSB Group (NYSE: LYG) to Neutral from Sell on expected pricing power following the HBOS (OTC: HBOOY) acquisition.
• Otter Tail (NASDAQ: OTTR) was upgraded to Outperform from Neutral at Baird.
• GFI Group (NASDAQ: GFIG) was upgraded at Citigroup to Hold from Sell.
• Merrill upgraded Logitech (NASDAQ: LOGI) to Neutral from Underperform.

Analyst downgrades:

• JP Morgan downgraded shares of Lloyds TSB Group to Underweight from Neutral on capital concerns and believes the HBOS acquisition is not in the best interest of shareholders.
• Stephens downgraded Universal Truckload (NASDAQ: UACL) to Equal Weight from Overweight on valuation and concerns about a slowdown in the flatbed sector. The firm's target remains $28.

Tyson Foods (NYSE: TSN) will be grumbling a bit this week after spending the summer revising labels for its poultry products. Previously, the USDA said the chicken giant could label its chicken products "raised without antibiotics." Now the U.S. Department of Agriculture says that decision was in error.

So, instead of enlightening Tyson customers with a more natural marketing message for its fresh chicken products, the campaign introduced this summer will now be canceled and the labels will be pulled off those products.

According to the USDA, a food additive called ionophores is indeed fed to Tyson's chickens before they are processed. The USDA has classified ionophores as antibiotics before and said it would not change its policy, much to the chagrin of Tyson marketing executives.

However, Tyson executives say that ionophores are not antibiotics and that the FDA does not consider them to be antibiotics either. Who will win out here? If it's the USDA, then Tyson just wasted quite a bit of marketing money to tell customers something that wasn't true. Well, according to the USDA at least.

Tyson Foods Inc. (NYSE:TSN) shares are up after the chicken, beef, and pork processor reported better-than-expected second-quarter results. The company posted $0.31 EPS, well above the $0.25 First Call estimate and well above a loss posted in Q2 2006. Revenues rose almost $600 million to $6.96 billion, also above the $6.74 billion estimate.

To top it off, the company also raised annual EPS guidance from $0.65 to $0.90 to $0.82 to $0.92. It appears the cost cutting and containment measures are working. The company has closed some processing plants, installed spending caps, and you haven't even heard press on major labor violations in a long time. The company's operating income improved in all operations including its prepared foods unit.

The company is also in the midst of a 'quasi-healthier' launch with its "Raised Without Antibiotics and Any'tizers(tm)" and is also in a renewable fuels venture based on leftover animal fat products that would otherwise end up in landfills.

The other good news here is that it has all the distribution channels in place, and it still has major brand recognition. The reason this is important is that the company noted a higher feedcost being offset by it raising its own sales prices.

Tyson has greatly improved its position from its woes a few years ago. Shares are up 50% from yearly lows and closer to recent highs. At $21.60, that's much closer to the $24.32 high over the last 52-weeks. This one sounds good enough, I think I'm having some chicken for lunch.

Jon Ogg is a partner at 24/7 Wall St.; he does not own securities in the companies he covers.

Update; The Chinese government has since claimed that a reporter faked the circumstances related in this report. A Gadling writer questions the government's credibility, though, and I share his skepticism.

The food fight between China and the U.S. ratcheted up a notch last week, or so it seems. China has blocked imports of some American chicken and pork after detecting bacteria or chemical contamination. This strikes me as ironic since at the same time, Chinese street vendors sell treats consisting mostly of cardboard.

The Chinese meat import market, served by, among others, Tyson Foods (NYSE: TSN) and Cargill, is already suffering a pork shortage, (and threatening to dip into its strategic pork reserve).

In a related story, AP wrote last week on a China Central Television report highlighting the country's problems with food safety. State TV's undercover investigation witnessed sidewalk vendors preparing their popular steamed bun using a mixture of 60% chemical-soaked cardboard to stretch the usual sliced pork and spices. The investigator found the result rather flavorless.

Perhaps there is an export market for used White Castle hamburger sleeves? They would be full of flavor.

Stock futures are slightly lower this morning (7:46 a.m.), indicating a similar open for stock ahead of a week full of economic data, namely inflation indicators, as well as retail and housing industry indicators.

Since today there are no major economic reports due other than Treasury budget at 2:00 p.m. Eastern, market could lack direction.

Earnings season still isn't over and this week a few Dow companies are still due to report earnings, Wal-Mart Stores, Inc. (NYSE:WMT), Home Depot Co. (NYSE:HD) and Hewlett-Packard Co. (NYSE:HPQ).

In Corporate New:

Reporting quarterly results today are including Tyson Foods Inc. (NYSE:TSN) with an expected per-share loss of 4 cents for the fourth quarter, and Dick's Sporting Goods, Inc. (NYSE:DKS) with analysts expecting 5 cents per share for the third quarter.

Another fallout from the options scandal, this time it's KB Home (NYSE:KBH) CEO Karatz who will be retiring because of errors in dating option grants.

International Business Machines Corp. (NYSE:IBM) is joining Citigroup Inc. (NYSE:C) in a bid to take a majority stake in China's Guangdong Development Bank. Citigroup has put in a bid of US$3 billion (€2.33 billion) for 85% of Guangdong Development Bank.

The Wall Street Journal reported that Gannett Co. (NYSE:GCI) has put a preliminary bid for rival Tribune Co. (NYSE:TRB). Maurice Greenberg, the former chairman of the insurance giant American International Group (NYSE:AIG), has also expressed interest in the company.

Also expected to move today:

Deutsche Telekom (NYSE:DT) CEO, Kai-Uwe Ricke , resigned. The company named Rene Obermann, who has led the company's T Mobile wireless division. DT shares rose in Frnakfurt.

Novartis (NYSE:NVS) said a three-month delay is needed by the FDA to review new data the company submitted on oral diabetes drug Galvus from more than 1,000 patients. NVS shares fell in Frankfurt.