MOST NOTEWORTHY: Smith & Nephew, British Sky Broadcasting and Electronic Data Systems were today's noteworthy downgrades:

• Smith & Nephew (NYSE: SNN) was cut to Underweight from Neutral at JP Morgan, citing deteriorating fundamentals in several of SNN's key business lines.
  
• Goldman removed British Sky Broadcasting (NYSE: BSY) from its Conviction Buy List and said shares continue to trade at all-time low multiples and that the timing with Sky-Virgin dispute remains unclear. Shares remain Buy rated.
  
• Friedman Billings downgraded Electronic Data Systems (NYSE: EDS) to Market Perform from Outperform based on valuation following the Hewlett-Packard (NYSE: HPQ) news.

OTHER DOWNGRADES:

• Goldman downgraded J Sainsbury (OTC: JSAIY) to Neutral from Buy and removed shares from the Conviction Buy List.
  
• Goldman also removed Hewlett-Packard from its Conviction Buy List.
  
• Citigroup cut BearingPoint (NYSE: BE) to Hold from Buy.
  
• Wachovia downgraded LHC Group (NASDAQ: LHCG) to Market Perform from Outperform.

Monday, May 12

• Sprint Nextel Corp. (NYSE: S) to report Q1 earnings; conference call at 8:00am.
• W.W. Grainger, Inc. (NYSE: GWW) to hold sales conference call at 8:00am.
• XM Satellite Radio Holdings, Inc. (NASDAQ: XMSR) and Sirius Satellite Radio, Inc. (NASDAQ: SIRI) to report quarterly earnings; the conference call is at 10:00am for XM and at 4:30pm for Sirius.

Tuesday, May 13

• Wal-Mart Stores, Inc. (NYSE: WMT) to report Q1 earnings; conference call at 7:30am.
• Toll Brothers, Inc. (NYSE: TOL) to report preliminary Q2 results and outlook at 2pm.
• Applied Materials, Inc. (NASDAQ: AMAT) to report Q2 earnings; conference call at 4:30pm.

Wednesday, May 14

• FCC Open Commission Meeting at 9:30am.
• SEC Open Commission Meeting at 10:00am.
• Macy's, Inc. (NYSE: M) to report Q1 earnings; conference call at 10:30am.
• Agilent Technologies, Inc. (NYSE: A) to report Q2 earnings; conference call at 4:30pm.

Hewlett Packard (NYSE: HPQ) shares opened in the red by more than 1% today, but have been regaining ground after laptop maker Compal Electronics Inc. lowered its shipment growth forecast for the second quarter to 10% from its previous estimate of 13-15%. Compal supplies laptops to HPQ, and said a shortage of batteries is responsible for the revised forecast. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on HPQ.

After hitting a one-year high of $53.48 in November, the stock hit a one-year low of $39.99 in January. This morning, HPQ opened at $48.24. So far today the stock has hit a low of $47.54 and a high of $53.48. As of 12:15, HPQ is trading at $48.15, down $0.12 (-0.25%). The chart for HPQ looks bullish and deteriorating slightly, while S&P gives the stock a bullish 4 Stars (out of 5) Buy rating.

For a bearish hedged play on this stock, I would consider a May bear-call credit spread above the $50 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in nine trading days as long as HPQ is below $50 at May expiration. HP would have to rise by more than 9% before we would start to lose money. Learn more about this type of trade here.

MOST NOTEWORTHY: Garmin, Thomson Reuters and Heritage-Crystal Clean were today's noteworthy initiations:

• Garmin (NASDAQ: GRMN) was initiated with a Neutral rating at JP Morgan. The firm sees risk to 2008 Street estimates given the consumer slowdown in the U.S. and potential ASP and margin pressure as channel inventory is worked down.
  
• Morgan Stanley assumed Thomson Reuters (NASDAQ: TRIN) with an Underweight rating and expects revenue growth in the company's financial business to slow sharply into 2009.
  
• William Blair believes Heritage-Crystal Clean (NASDAQ: HCCI) has the opportunity to gain market share over the next several years as a result of its differentiated parts-cleaning programs, strong sales organization, and experienced management team. Shares were assumed with an Outperform rating.

OTHER INITIATIONS:

• Lehman initiated Dell (NASDAQ: DELL) and Sun Microsystems (NASDAQ: JAVA) with Equal Weight ratings and targets of $20 and $17 and Apple (NASDAQ: AAPL), IBM Corp (NYSE: IBM) and Hewlett-Packard (NYSE: HPQ) with Overweight ratings and targets of $195, $144 and $59, respectively.
  
• Pacific Growth started Spectranetics (NASDAQ: SPNC) with a Neutral rating.
  
• Merrill reinstated Chevron (NYSE: CVX), ExxonMobil (NYSE: XOM) and Hess Corp (NYSE: HES) with Buy ratings and price targets of $110, $105 and $125, respectively.

After announcing last week that it plans to save $3 billion over the next three years by slashing production costs in all areas, Dell Inc. (NASDAQ: DELL)'s Chief Executive Michael Dell announced today that he expects a profitable 2008 year for the company. Dell's goal to improve profits for the year will be a result of its strategy to move its resources to growing emerging market countries.

Dell also restated the company's target to buy back $1 billion of its own shares during this quarter. The move follows another repurchase of $4 billion in the fourth quarter. Over the long term, Dell aims an earnings per share growth each year and is confident it has "the right plans in place" to get it, Dell said.

Michael Dell predicted that 2008 would be a prosperous year as sales numbers are already looking great. For example, in Israel, the company last year saw an increase of 67% for its sold products, and it has been seeing even faster growth during the first three months of this year.

When Hewlett-Packard Co. (NYSE: HPQ) again topped expectations for its latest fiscal quarter this week, the world's largest computer maker seemed like it could do no wrong. In addition to again besting estimates, CEO Mark Hurd again set the bar high for other tech CEOs. If Dell, Inc. (NASDAQ: DELL) CEO Michael Dell believes he's got a fierce competitor in Hurd, that would be an understatement. Hurd is everything former Dell CEO Kevin Rollins should have been and more.

But that's still not good enough for the low-key Hurd, who most likely believes that the company can still do better. After raising guidance this week for the remainder of 2008, Hurd stated that "we've got a lot of work to do here," using his famous phrase that he's used to describe various high-performing business units within the company. Hurd also dropped a hint that he won't be CEO of the world's largest computer maker forever, stating that "It's important to know when your work is done ... CEOs can stay too long." Not that Hurd is going anywhere at the moment -- he just recognizes that he'll be exiting HP at some point in the future when the time is right.

Hurd's taken a unique, nuts-and-bolts approach to his job that has flat-out worked. Instead of trumpeting vision, he focuses in on strategy and execution. Instead of chasing market share at all costs, he looks at each business unit with laser precision and pays special attention to costs. By taking care of the underlying infrastructure and nurturing all those components, success will emerge. It sure has for H-P, which seems to be outgunning competitor Dell in just about every area where the two compete. It'll be that way until Hurd retires from the company, which will probably be many years from now. Until then, H-P looks to be continually poised at the top.

MOST NOTEWORTHY: Dell, Hewlett-Packard and Advanced Medical were today's noteworthy upgrades:

• JP Morgan upgraded shares of Dell (NASDAQ:DELL) to Overweight from Neutral on valuation, as they believe current levels provide an attractive entry point. JP Morgan thinks their bearish view on 2008 growth and margins has been priced into shares.
  
• JP Morgan added Hewlett-Packard (NYSE:HPQ) to its U.S. Focus List, as the firm believes current sentiment is overly bearish, that printing share gains are healthy and costs savings should continue.
• Jefferies upgraded shares of Advanced Medical (NYSE:EYE) to Buy from Hold on valuation as they believe the stock is oversold at current levels.

OTHER UPGRADES:

• Equinix (NASDAQ:EQIX) was upgraded to Outperform from Market Perform at Wachovia.
  
• Lehman upgraded Peugeot (PEUGY) to Overweight from Equal Weight.
  
• UBS raised Illumina (ILMN) to Buy from Neutral.

Not only is Lenovo introducing newer laptop PCs (the IdeaPad) to compete with stylized laptop PCs from Dell, Hewlett Packard, and Apple, the company is making its newer consumer laptop PC designs as slick as those from the competition and it edging in on Apple for some of the coolest laptop designs in all of the laptop PC industry.

Oddly, China's Lenovo and Taiwan's Asustek and Acer are looking for growth in the laggard market of the PC industry -- the U.S. PC sales are increasing more than two times the growth rate in the U.S. when it comes to many Asian countries, and one would think that following the growth would be a more important priority for manufacturers in a commodity industry. Not so.

U.S. sales may have some margin to give back to manufacturers (as in, profit margin) by grabbing hold of the U.S. consumer with sizzling and stylistic designs and winning them over with an experience instead of a boring black box or laptop with the normal disposition of a toaster oven.

Add to that the fact laptop sales are growing in a large way as consumers dump those desktop PCs for those portable, wireless PCs, and it's no surprise Chinese and Taiwanese manufacturers want most of those newer laptops sold in the U.S. to be their brands and not Apple, Inc. (NASDAQ: AAPL), Dell Inc. (NASDAQ: DELL) or Hewlett-Packard Company (NYSE: HPQ).

Hewlett Packard (NYSE: HPQ) has been on a tear in 2007. Its stock has risen, the company has seen quarter after quarter of rising sales and profits, it has made some strategic acquisitions that have really added value to the company and it has become the world's largest tech company by revenue.

What else is left? How about profit margin increases in its 2009 fiscal year as the company continues to cut costs and sees growth expand further using acquisitions? It's been great for HP this year, but the future looks even rosier based on the company's statements yesterday. Get this: the company sees fiscal year 2009 revenue growth of 5% to 6%. That equates to roughly $117.1 billion to $118.2 billion in annual sales.

HP CEO Mark Hurd, who has a reputation as an operational leader with the cost-cutting moxie to match anyone, has said in the company's last few quarterly conference calls that HP still has a long way to go in getting rid of unneeded expenses. Should competitor Dell (NASDAQ: DELL) be worried? Probably. HP is not going away and will only get leaner as time goes on, and it's already firmly established in all the selling areas it needs to be -- as well as being a more diversified company.

Hewlett Packard (NYSE: HPQ) announced this morning that it would be purchasing NUR Macroprinters, an Israeli-based maker of inkjet printers, for $117.5 million. As HP marches straightforward into bolstering its hardware assets, this one should make a very good acquisition for the world's largest PC manufacturer.

The terms of the deal specify that $14.5 million of the purchase price would be held in an indemnity escrow account as well -- that's standard practice in some mergers. No surprise there. HP wants NUR to be folded into its large-format hardware printing business, for which it has a strong slice of market share.

While other companies seem to be making less in hardware, save for Apple (NASDAQ: AAPL), HP is doing the opposite. It's making money in the PC business (a feat in itself) and in the other hardware businesses it operates in. Not be left behind, HP is making major headway in the software intelligence business as well thanks to Mercury Interactive.

Monday, November 19

• Digital Angel (AMEX: DOC) to hold company update conference call at 8:30 a.m.
• Hewlett-Packard (NASDAQ: HPQ) to report Q4 earnings; conference call at 5 p.m.

Tuesday, November 20

• Freddie Mac (NYSE: FRE) to report Q3 earnings; conference call at 10 a.m.
• Target Corporation (NYSE: TGT) to report Q3 earnings; conference call at 10:30 a.m.

Wednesday, November 21

• Abercrombie & Fitch (NYSE: ANF) to report Q3 earnings; conference call at 8:30 a.m.
• Deere (NYSE: DE) to report Q4 earnings; conference call at 10 a.m.
• Gap (NYSE: GPS) to report Q3 earnings; conference call at 10:30 a.m.

Thursday, November 22

• Thanksgiving Holiday

Friday, November 23

• Black Friday
• PDUFA date for Biomarin (NASDAQ: BMRN)'s Kuvan, formerly Phenoptin, for treatment of Phenylketonuria.

Hewlett-Packard(NYSE:HPQ) is recently up 82c to $49.74. HPQ will report EPS on the close of November 19. HPQ will host an analyst meeting on December 11. HPQ December option implied volatility is at 39, January is at 35, above its 26-week average of 28 according to Track Data, suggesting larger risk.

Options traders are aware in the next nine and half days their will only be four and half days for trading, leaving five days for options to decay. When the markets are not open, long premium option positions decay and traders are unable to capture or hedge price movements.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Hewlett-Packard Co. (NYSE: HPQ) wants to get out of the digital camera business and is looking at OEM manufacturers to design, source, manufacture and distribute digital cameras under its brand instead. This comes as a little of a surprise since the digital camera market is still white hot in terms of annual sales.

However, the competition is absolutely fierce between market leaders Canon, Sony and Kodak and a whole collection of other manufacturers with a zillion brand names under their collective wings.

HP probably wants to focus on areas where it has higher profit potential, and that's hard to see in the consumer digital camera sales game. While the competition has consumer and professional digital camera offerings, HP's consumer-only focus gives it less leverage in this marketplace.

The company stated that it wants to more heavily focus on the imaging/printing business instead of the imaging hardware business, so there you go. HP will take a $30 million charge in its Q4 period related to the move and added that it will be shifting resources freed up from the market exit to web printing services and digital publishing. That shift makes sense due to profit margin generation alone, and I doubt anyone will miss HP's digital consumer cameras on retail shelves anyway.

We now have the first large settlement in the wake of the options backdating scandal. Hewlett-Packard (NYSE: HPQ) will have to shell out $117.5 million to settle allegations of backdating at Mercury Interactive, a company HP acquired last year. Given that Hewlett-Packard earned over $6 billion in its most recent year, this is hardly disastrous news. The Street is probably glad to have all this behind it -- a quantifiable settlement is better than the threat of a massive judgment hanging over head.

But the settlement is important for another reason. Up until now, the largest settlement has been just $18 million, but this deal means investors have to take these pending lawsuits seriously -- especially at smaller companies.

To find out if a stock you own is involved in this mess, go through the commitments and contingencies, legal proceedings, or factors that could affect future results portion of the company's most recent 10-K. HP disclosed its options woes like this, with additional detail following:

In connection with our acquisition of Mercury, we have assumed responsibility for various stockholder derivative matters and regulatory inquiries that were pending against Mercury at the time of the acquisition, which could result in significant legal expenses and may result in the payment of substantial amounts in damages.

$117.5 million won't affect HP in any material way -- but other companies may not be so lucky.

Last night Hewlett Packard Company (NYSE: HPQ) reported third quarter results which far exceeded analysts' expectations. Here are some highlights:

• Non-Gap EPS of 71c vs. consensus of 65c
• Revenue of $25.4B vs. consensus of $24B
• YoY growth in America up 14%
• YoY growth in Europe/Middle East/Africa up 16%, in Asia Pacific up 22%
• YoY growth in BRIC countries up 35%
• Fourth quarter EPS outlook of 80c-81c vs. consensus of 77c
• Fourth quarter revenue outlook $27B-$27.2B vs consensus of $26.4B

Wall Street was exceedingly positive on the results, with positive comments at a number of firms, including Bear Stearns raising their target price to $68 from $63 and BMO Capital noting that Hewlett is one of its top picks. Only Think Equity was not impressed, saying to sell Hewlett as competition may be a problem to Hewlett's profitability.

Hewlett Packard jumped this morning from a closing price of $46.05 to around $47.70 in trading this morning.