Darden Restaurants (NYSE: DRI), owners of Red Lobster, Olive Garden, Bahama Breeze and Smokey Bones, posted 3Q 2006 earnings recently. In its press release, Darden Restaurants management claims record diluted net earnings of 0.72 per share, a 7% increase over 3Q 2005. Net sales increased 4.7% to $1.54 billion.

Sounds good so far. But Darden bought back 4.3 million of its own shares this quarter. This dilutes the number of shares outstanding so the 7% increase in earnings per share is actually closer to 1.5%. Total earnings per share budged up a little bit to $106.4 million for the quarter.

Darden's press release trumpets the fact that Olive Garden recorded its 50th consecutive quarter of same-restaurant sales growth. This quarter sales were up 1%, just barely enough to keep the streak alive. 3Q revenues were up to $722.4 million, in part due to a net increase of 28 new Olive Garden locations.

Same-restaurant 3Q sales were up 4.6% at Red Lobster, with overall sales up to $684.2 million. 3Q sales were down less than 1% at Bahama Breeze, to $38 million. Likewise, 3Q sales were down 1.5% to $87.2 million at Smokey Bones.

Darden management forecasts very modest sales growth of 2-3% for FY 2007, while opening 35-40 new locations throughout the year.

There are going to be a couple of big names tomorrow reporting earnings. Three of the biggest companies to keep an eye on in tomorrow's market will be Morgan Stanley, Federal Express and Darden Restaurants.

Morgan Stanley (NYSE: MS) will be announcing their first quarter 2007 earnings tomorrow before the market opens. The company is expected to report earnings for the quarter of $1.88 per share. During the first quarter in 2006 the company put up $1.51 per share. The last time MS reported earnings was on December 19th when the posted earnings per share of $2.08 which easily beat analysts estimates of $1.77. The stock has traded up 1.4% so far today to $76.04 up $1.02.

FedEx Corp (NYSE: FDX) is going to be reporting earnings tomorrow before the bell as well. The company is due to report their third quarter earnings and analysts are expecting to see $1.33 per share. During the same period a year ago FedEx posted $1.38 per share. The company last reported earnings on December 19th and beat estimates at that time by coming in with $1.89 compared to analysts estimates of $1.76. On the day FDX has traded pretty flat. The stock is currently trading down 0.2% to $112.27 down $0.21.

Darden Restaurants (NYSE: DRI) is going to be releasing their third quarter 2007 earnings tomorrow afternoon following the market close. Analysts are expecting the company to report $0.70 per share compared with $0.67 for the same period a year ago. The company beat estimates of $0.40 when they last reported earnings of $0.41 back on December 19. The stock has seen some nice upside today picking up 1.7% to $41.36 up $0.69.

Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer.

MOST NOTEWORTHY: Circuit City (CC) and Best Buy (BBY) were the most notable upgrades today:

• JP Morgan upgraded Circuit City Stores Inc. (NYSE:CC) to Overweight from Neutral, telling clients it is taking advantage of more realistic expectations and valuation; they also see some positive catalysts in 2008 that may include product introductions, such as Microsoft Corp.'s (NASDAQ:MSFT) Vista and the availability of the PS3 from Sony Corp. (NYSE:SNE) and Nintendo Ltd.'s (OTC:NTDOY) Wii.
• Credit Suisse upgraded Best Buy Co. Inc. (NYSE:BBY) to Outperform from Neutral with a $59 target, telling clients the focus on the electronics retailer has moved too much into the slight shortfall of Q3, which undervalues the solid growth through 2007 as well as the strong balance sheet the company enjoys.

OTHER UPGRADES:

• Darden Restaurants Inc. (NYSE:DRI) was upgraded to Market Perform from Underperform at Raymond James.
• Accenture Ltd. (NYSE:ACN) was upgraded to Sector Perform from Underperform at RBC Capital Markets, and believes that strong demand for consulting, solid outsourcing visibility, and strong financial fundamentals are likely to offset the negative impact of offshore labor cannibalization in the near-term; Baird also upgraded Accenture, to Outperform from Neutral with a $39 target, following strong first quarter earnings and guidance.
• Deutsche Bank is positive on Publicis Groupe (NYSE:PUB) acquisition of Digitas Inc. (NASDAQ:DTAS) and upgraded the acquirer to Buy from Hold.

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

Stock futures are negative in early morning trade, indicating to a similar start for stocks.

Several key factors will affect the market today: Investors will try to gain a better understanding of economic condition when inflation and housing market data are released. These will be weighed against disappointing financial results from Oracle. Meanwhile, Asian markets could also push markets down.

The Thai stock market suffered a 19% plunge and consequently a suspension in trading. It closed down 14.8%. This was due to measures taken by the Thai Central bank trying to strengthen the baht and putting constraints on foreign investments. In return, foreign investors pulled the plug. Other Asian markets sold off as well with the Hang-Seng and the Nikkei shedding 1%.

At home, an hour before the start of the trading session, November housing starts and building permits are due. A measure of inflation, producer price index will also be released at that time. Economists expect a 0.5% gain in November PPI compared to a 1.6% decline in October and a 0.2% increase in core PPI -- ex-food and energy -- compared with a 0.9% decline the month before. Any indication that either the housing market has seen its trough or better readings on the inflation front, could help stocks.

Oracle Corp. (NASDAQ:ORCL) posted second quarter earnings late yesterday. Net income rose to $967 million, or 18 cents per share, from $798 million, or 15 cents per share, a year ago. Revenue rose 26% to $4.2 billion. These matched analyst expectations. However, new software licenses were below expectations and shares plunged more than 2.5% in after-hour trading.

According to the Wall Street Journal, eBay Inc. (NASDAQ:EBAY) is expected to announce Tuesday a new partnership and joint-venture in China. eBay will partner with Tom.com and together they will open a new Chinese Web site to be operated by Tom Online Inc. eBay will hold a 49% stake in the new site and Tom Online 51%.

Pfizer Inc. (NYSE:PFE) said Monday Chief Executive Jeffrey B. Kindler will also become chairman on Tuesday as the world's largest company raised its first-quarter dividend 21%.

AT&T Inc. (NYSE:T) and BellSouth (NYSE:BLS) much talked about merger is now doubtful as Monday Robert McDowell, a member of the Federal Communications Commission and a former telecommunications industry lobbyist, said he will not be voting on the deal.

Reporting today are:

MOST NOTEWORTHY: Nokia (NOK) and selected restaurants topped today's extensive list of downgrades:

• Due to slowing in the wireless sector, Oppenheimer downgraded shares of Nokia Corp. (NYSE:NOK) to Neutral from Buy, following Texas Instruments' (NYSE:TXN) lowered guidance;
• Citing valuations and a deteriorating outlook, Buckingham downgraded shares of Darden Restaurants Inc (NYSE:DRI) and Wendy's Inernational Inc. (NYSE:WEN) to Neutral from Accumulate, as well as Yum! Brands Inc. (NYSE:YUM) and Jack in the Box Inc. (NYSE:JBX) to Underperform from Neutral.

OTHER DOWNGRADES:

• JP Morgan downgraded Micron Technology Inc. (NYSE:MU) to Neutral from Overweight based on concerns of growing inventory levels and a weaker-than-expected flash market in the first half of 2007.
• Citigroup Inc. (NYSE:C) was removed from Sandler's Focus List.
• Calyon downgraded Johnson Controls Inc. (NYSE:JCI) to Neutral from Buy with an $85 target, citing valuation and the weakening economy.
• RBC Capital Markets downgraded Alcoa Inc. (NYSE:AA) to Underperform from Sector Perform on valuation.

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

MOST NOTEWORTHY: Microsoft (MSFT) and Darden Restaurants (DRI) top today's list of upgrades.

• Credit Suisse upgraded Microsoft Corp. (NASDAQ:MSFT) to "Outperform" from Neutral, citing the company's strengthening market position in digital entertainment and potential revenue upside.
• JP Morgan upgraded Darden Restaurants, Inc. (NYSE:DRI) to Neutral from Underweight, reflecting lower commodity costs and solid performance in Olive Garden.

OTHER UPGRADES:

• Triad Hospitals, Inc. (NYSE:TRI) was upgraded from Reduce to Buy at UBS; the upgrade is based on the increased confidence Triad will implement strategic changes to increase shareholder value.
• Morgan Stanley expected a rebound in the ICD market and upgraded St. Jude Medical, Inc. (NYSE:STJ) to Overweight from Equal Weight.
• SafeNet Inc (NASDAQ:SFNT) was added to Stifel Nicolaus' Select List with a $31 target. SafeNet is said to be making progress with their stock option issues and they find the valuation to be attractive.

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

Today on Jim Cramer's STOP TRADING segment on CNBC, he raved: "the market is making fortunes people!"

He said Yum! Brands, Inc. (NYSE:YUM) and McDonald's Corporation (NYSE:MCD) are winning on food and he was positive on Darden Restaurants, Inc. (NYSE:DRI) and The Procter & Gamble Company (NYSE:PG).

He said the fuel is coming out of oil and out of staples, and "the market is going higher." He even used the "so sue me" disclaimer afterward, but that's Cramer for you.

PepsiCo, Inc. (NYSE:PEP) wasn't that great and he is out of Kellogg Company (NYSE:K).

Phelps Dodge Corporation (NYSE:PD) is big and it is going to par, meaning $100. PD is trading at just under $93.00 as of his comments.

Now here is the problem with his segment; it's not just the criticism he gets so often, that he has too many pieces of advice. He was talking so fast you could barely understand him. He jokes about taking drugs; it would be easier to keep up if you were on speed while you watched.

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