Rite Aid Corp. (NYSE: RAD) wallowed in the red Thursday morning, after the drugstore chain disappointed Wall Street with its second-quarter earnings and full-year guidance.

Rite Aid said its quarterly loss narrowed to $116 million, or 14 cents per share, while revenue dwindled 2.7% to $6.3 billion. Same-store sales dipped 1.1%, while gross margin contracted from 27.4% to 26.7%.

FedEx Corp. (NYSE: FDX) is on the upswing after hiking its fiscal first-quarter earnings guidance. The parcel specialist said Friday morning that it expects first-quarter profits of 58 cents per share, up from its previous outlook of 30 cents to 45 cents per share. For the current quarter, FedEx predicts earnings of 65 cents to 95 cents per share.

Both figures compare favorably to analysts' consensus estimates, which call for a first-quarter profit of 44 cents per share and second-quarter earnings of 70 cents per share. Chief Financial Officer Alan Graf cited stronger-than-expected volume in FedEx's international priority-delivery service for the upbeat guidance, as well as strict internal cost management.

Milwaukee-based Joy Global Inc. (NASDAQ: JOYG) offered up its fourth-quarter earnings report today, with the company raking in a profit of $1.11 per share on $1 billion in sales. The results surpassed analysts' expectations, which called for earnings of $1.08 per share.

The mining-equipment concern also updated its fiscal 2009 guidance. Joy Global now expects revenues of $3.5 billion to $3.7 billion for the current fiscal year, with earnings per share arriving between $3.60 and $4.00. The forecast fell short of Wall Street's consensus estimates for a full-year profit of $4.24 per share on $4 billion in revenue.

With so many corporations falling short of quarterly earnings expectations, investors have been quick to reward JOYG's better-than-expected fourth quarter. The stock gained roughly 10% in the first hour of today's trading, propelling the shares above resistance from their descending 10-week moving average.

Once the euphoria fades, though, Joy Global could be vulnerable to negative analyst notes. Zacks reports six Strong Buy ratings and two Buys, compared to just three skeptical Holds. If any of these bullish brokers are disappointed by the company's modest outlook for 2009, the stock could be hit with downgrades.

Price-target cuts are also a potential threat. JOYG's average 12-month price target is $49.45, according to Thomson Financial, representing a lofty premium of 118% to Tuesday's closing price. Any downward revisions to this consensus estimate could draw fresh selling pressure to the security.

Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.

There was a short blurb about Xerox (NYSE: XRX) in the news on Monday. Management at the company wanted investors to know that it won't be needing to beg for the green stuff. Cash flow from operating activities, existing credit facilities, and a leaner business will carry the technology company through the current difficult period. Xerox gave a wide earnings range for 2009, saying it should book between $1 and $1.25 per share. Analysts are counting on $1.15 per share.

Well, that range makes it kind of difficult to predict how things will turn out in terms of whether the company will beat Wall Street or not; might as well flip a quarter. The more important thing to focus on is that Xerox will be profitable and that it is confident in its liquidity. The stock was up almost 18% at the close yesterday on nice volume. With the recent rally, should you look at Xerox as an investment, or a trade?

Xerox isn't one of my favorite stocks. I have no interest in it on a long-term basis. It just isn't a leading innovator these days, and there are way better alternatives out there if you want a core, long-term holding in the tech sector. Microsoft (NASDAQ: MSFT), Hewlett-Packard (NYSE: HPQ), and Apple (NASDAQ: AAPL) are three names off the top of my head I'd look at first.

Nokia (NYSE: NOK - option chain) shares are falling today after the company warned that the global mobile phone market will weaken in 2009. NOK forecast global handset sales of 1.24 billion phones in 2009, down from a previous estimate of 1.26 billion. The entire industry is taking a hit today from this announcement including competitors like Research in Motion (NASDAQ: RIMM) and Motorola (NYSE: MOT) as well as suppliers such as Qualcomm (NASDAQ: QCOM). If you think this Nokia won't be rising too far in the coming months of economic headwinds, then it could be a good time to look at a bearish hedged play on NOK.

This morning, NOK opened at $12.43. So far today the stock has hit a low of $12.22 and a high of $12.97. As of 12:40, NOK is trading at $12.57, down $1.58 (11.2%). The chart for NOK looks neutral and S&P gives NOK a 3 STARS (out of 5) hold ranking.

For a bearish hedged play on this stock, I would consider a December bear-call credit spread above the $15 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 an 11.1% return in five weeks as long as NOK is below $15 at December expiration. Nokia would have to rise by more than 19% before we would start to lose money. Learn more about this type of trade here.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in NOK, RIMM, MOT, or QCOM.

Blue-chip soda titan Coca-Cola Company (NYSE: KO) slipped into the red this morning after Standard & Poor's last night revised the company's outlook to "negative." The ratings change also affects the Dow component's two main bottling units, Coca-Cola Enterprises (NYSE: CCE) and Coca-Cola Hellenic Bottling (NYSE: CCH). Analyst Jean Stout noted, "Weak economic conditions in select markets and volatile commodity costs have pressured the Coke system's operating performance."

Currently, Coca-Cola's S&P rating is "A+," the fifth-highest investment-grade notch. The downwardly revised outlook indicates that the rating is in danger of being cut over the next one to two years. In response to S&P's "negative" label, CCE postponed pricing a previously announced, $1 billion bond issue.

Stout added that "reduced share repurchases at Coke could restore some financial flexibility to the Coke system," but warned, "weakening macroeconomic conditions, as well as further acquisitions at Coke, CCE, or CCHB will likely further weaken Coke system credit measures."

Shares of the nation's largest automaker, General Motors Corp. (NYSE: GM), have been soaring in premarket despite posting a large first quarter loss, as the company surprised Wall Street by reporting a smaller than expected loss per share.

For the quarter, General Motors said it swung to a loss of $3.3 billion, hurt by continued weakness in U.S., waning demand for its sport utility vehicles, and a supplier strike. The company stated that the strike, which started two months ago at American Axle and Manufacturing Holdings Inc. (NYSE: AXL), came with charges that totaled $800 million, and slashed vehicles production by 100,000.

Weighed down by those costs, GM posted a net loss of $5.74 per share, compared with a profit of 11 cents a share a year-earlier. However, excluding one-time items, the automaker reported a loss of 62 cents per share. Going into today's earnings announcement, analysts had been expecting the company to show a much higher loss of $1.60 per share.

ITT Corp. (NYSE: ITT) shares are trading higher after the company announced this morning it expects to beat previously issued first-quarter and full-year profit outlook. ITT predicted first quarter earnings of 80 cents to 82 cents per share, and between $3.80 and $3.95 per share in 2008. Analysts forecast first-quarter earnings of 81 cents per share and full-year earnings of $3.93 per share. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on ITT.

After hitting a one-year high of $73.44 in July, the stock hit a one-year low of $50.94 in March. ITT opened this morning at $57.95. So far today the stock has hit a low of $56.84 and a high of $59.25. As of 12:15, ITT is trading at $57.26, up $0.81 (1.4%). The chart for ITT is bearish but improving while S&P gives ITT a positive 4 STARS (out of 5) buy rating.

For a bullish hedged play on this stock, I would consider a May bull-put credit spread below the $50 range. A bull-put credit spread is an options position that combines the purchase and sale of put 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 7.5% return in just one month as long as ITT is above $50 at May expiration. ITT would have to fall by more than 12% before we would start to lose money. Learn more about this type of trade here.

Broadcom Corp. (NASDAQ: BRCM) stock is falling after fellow chip manufacturer Marvell (NASDAQ: MRVL) indicated an outlook for the first quarter of this year that investors did not like the looks of. 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 BRCM.

After hitting a one-year high of $43.07 in October, the stock has hit a new one-year low today. This morning, BRCM opened at $17.75. So far today the stock has hit a low of $17.35 and a high of $18.73. As of 12:30, BRCM is trading at $17.66, down 93 cents (-5.0%). The chart for BRCM looks bearish and steady, while S&P gives the stock a positive 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 $22.50 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 an 8.7% return in two and a half months as long as BRCM is below $22.50 at May expiration. Broadcom would have to rise by more than 27% before we would start to lose money.

BRCM hasn't been above $22.50 since January and has shown resistance around $20 recently. This trade could be risky if the economic situation turns around, but even if that happens, this position could be protected by resistance BRCM might find at its 50 day moving average, which is currently around $23 and falling.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in BRCM.

Hewlett-Packard Co. (NYSE: HPQ) stock is falling with most other tech stocks this morning after Cisco Systems (NASDAQ: CSCO) issued a 10% sales growth forecast for its current quarter, which was well below estimates of 15 percent growth made by analysts. The forecast sent CSCO shares slipping and seems to have investors worried that a recession would hit the tech sector hard. 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 has declined steadily following a brief spike in December. This morning, HPQ opened at $41.80. So far today the stock has hit a low of $40.61 and a high of $42.16. As of 10:45, HPQ is trading at $41.00, down $1.16 (-2.8%). The chart for HPQ looks bearish but improving slightly, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

For a bearish hedged play on this stock, I would consider a March bear-call credit spread above the $45 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 13.6% return in six weeks as long as HPQ is below $45 at March expiration. HPQ would have to rise by more than 9% before we would start to lose money.

HPQ hasn't been above $45 since early January and has shown resistance around $44.50 recently. This trade could be risky if the economy turns around quickly, but even if that happens, this position could be protected by resistance HPQ might find around $45, where the stock topped out twice in the past month.

Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in CSCO. He does control a bullish position in HPQ.

Shares of chemical maker EI DuPont de Nemours & Co. (NYSE: DD) are trading higher this morning after the company lifted both its 2007 and 2008 earnings outlook, citing strength in its agriculture and nutrition business and higher raw material prices.

The company said it expects to show a rise of 11% or more for its 2007 profit, based on better-than-predicted fourth-quarter numbers. According to Charles O. Holliday Jr. , the company's Chief Executive Officer, DuPont's quarterly sales came in above analysts' expectations, lifted by "science-driven innovations and market differentiation."

The third-biggest U.S. chemical maker now anticipates 2007 earnings per share of $3.20, excluding special items. That's at the upper end of its earlier forecast for earnings per share in a range of $3.15 and $3.20. DuPont's predictions for 2007 exclude $0.09 per share of charges and a net benefit of $.02 per share. Analysts, on average, forecast a profit of $3.19 per share.

Goldman Sachs (NYSE: GS) says that the odds of a recession in the U.S. have moved from 30% to a range of 40% to 45%. But economists at the investment bank "now expect the U.S. Federal Open Market Committee to cut interest rates to 3% by mid-2008, down from its earlier forecast of 4%," according to MarketWatch.

Over at the U.S. Conference of Mayors things look a little different. They commissioned a study by Global Insight Inc., which suggested that the value of U.S. housing will fall $1.2 trillion next year, and that foreclosures could hit 1.4 million. But "Global Insight predicted that the economy would grow at a 1.9% rate in 2008," writes The Wall Street Journal. The firm even expects modest job growth.

Between the two opinions there appears to be little beyond smoke and confusion. As the year wears on and the stock market falls, the number of views about the 2008 economy grows, with little consensus.

That leaves investors to ponder the most important factor in most of the studies. Will housing problems sink the rest of the economy, or can the damage be isolated to those consumers who have problems directly related to their homes?

No one can answer that. No matter who issues them, the opinions are only a guess.

Douglas A. McIntyre is an editor at 247wallst.com.

Office Depot, Inc. (NYSE: ODP) stock is falling this morning on news that it does not expect fourth quarter sales to match sales from the third quarter. Q3 results reported today were solid, as the company posted 43 cents EPS against expectations of 40 cents, but the company's outlook for the holiday dragged down shares and in this morning's conference call, ODP warned that 2008 first quarter sales could also drop off. 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 ODP.

After hitting a one-year high of $42.03 last November, the stock hit a one-year low of $16.51 in October. This morning, ODP opened at $18.08. So far today the stock has hit a low of $17.82 and a high of $18.71. As of 10:55, ODP is trading at $18.25, down 55 cents(-2.9%). The chart for ODP looks neutral but improving, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

Sun Microsystems (NASDAQ: JAVA) has been on a wild ride in recent years. The company has been battered in the corporate space as cheaper hardware and operating system alternatives (like Linux) cropped up and stole profitable market share from the Silicon Valley stalwart. When company founder Scott McNealy handed the reins over to then-CEO Jonathan Schwartz, many investors did not know what to think. By now, they probably do.

Sun has delivered profitability for three straight quarters after making its once-proprietary Solaris operating system an open-source product, and it's mirrored a good deal of IBM's move to a revenue model built on services instead of software and hardware. With computer server hardware still rapidly moving into the commodity stage (if it's not there already), this move could not have come any sooner for Sun. Schwartz knew it, and acted in time.

Schwartz presented Sun's plans for cost initiatives and growth plans for the new fiscal year early this morning in New York City while many investors and Sun pundits watched and listened with a careful and scrutinizing eye (and ear). With Sun shares up over 6.5% in just the last week, what was the chatter from today's announcement? The meeting began at 8am EST today, and transcripts and audio downloads are available here.

Boston Globe reporter Hiawatha Bray is backtracking on his earlier column that Apple, Inc.'s (NASDAQ: AAPL) iPhone is perfect. While his employer fronted him the $600 to consider an iPhone purchase, Bray cites four reasons he'll return it:

• It doesn't sync with Microsoft Corporation (NASDAQ: MSFT)'s Outlook. Bray likes Outlook and has "his life" on it and he was delighted to see that the iPhone is designed to let users copy their addresses, phone numbers, and appointments into it. That means users can find their Outlook phone numbers on the iPhone, then just tap a number to dial a call. Unfortunately, it took Bray about a dozen tries before the iPhone copied the Outlook data stored on his work PC; it's never worked on his home machine. Bray found at least a dozen online complaints from iPhone owners with similar problems. Either the iPhone won't sync with Outlook at all, or it does so intermittently or incompletely.
• The GPS navigation doesn't work. Bray admits this is a trick question but he finds it hard to believe that the $600 iPhone lacks GPS, a feature built into the Verizon Communications, Inc. (NYSE: VZ) Wireless phone he got for free when he renewed his contract in 2006. Bray finds the iPhone's Google, Inc. (NASDAQ: GOOG) Maps implementation quite useless when he's lost. And he doesn't understand why GPS is now common in the cheapest phones, but absent from the iPhone.