The Zacks Analyst Blog Highlights: Hewlett-Packard, Microsoft, IBM, and Smithfield Foods - Press Releases

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For Immediate Release

Chicago, IL - December 12, 2011 - announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Hewlett-Packard Company ( HPQ ), Microsoft Corporation ( MSFT ), IBM ( IBM ), ( CRM ) and Smithfield Foods Inc. ( SFD ).

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Here are highlights from Friday's Analyst Blog:

HP, Microsoft Sign Cloud Agreement

Cloud computing has emerged as the buzzword for all major technology players and Hewlett-Packard Company ( HPQ ) is no exception. The company recently announced that it has entered into a four-year agreement with Microsoft Corporation ( MSFT ). Under the agreement, HP will provide cloud computing solutions to Microsoft for extending its communication and collaboration applications to business and government customers.

Both the tech majors have sensed significant opportunity prevailing in the cloud computing space, and have collaborated to cash in on this. Cloud computing offers enhanced power and speed to the users as well as corporate computing, which includes applications and devices. Cloud-based applications typically deliver rich and expansive online experience.

However, challenges regarding the shift to cloud computing persist around the world, as most of the employees are apprehensive about moving from traditional on-premises systems, infrastructure and applications.

The joint venture between the two companies has a role to play in this regard, in our view. Microsoft intends to use HP's private cloud services to offer its Microsoft Exchange Server 2010, SharePoint Server 2010 and Lync Server 2010. Moreover, HP will resell Microsoft Office 365 with several of its own cloud services, while Microsoft plans to use its own public cloud services to offer Microsoft Office 365 and its Office tools.

In theory, this business model will be helpful for new companies that are yet to establish their own infrastructure. Simultaneously, it will also reduce the networking cost of already established companies that need to address the challenge of keeping their IT up-to-date.

Despite this potential, cloud computing has not yet achieved the popularity it had promised. As per a research report published by Deutsche Bank, quoting from a survey by PricewaterhouseCoopers about the German cloud computing market, the reasons for the lower-than-anticipated performance are data protection and compliance (60%), standardization of internal processes (53%) and arranging individual service-level agreements (49%).

So, if cloud computing is to deliver on its promise, service offerings will have to satisfy individual and legal standards with regard to data privacy. So we expect companies like Hewlett-Packard, IBM ( IBM ) and ( CRM ) to improve their R&D to plug these gaps, thereby transforming cloud computing in a big way.

Both Hewlett-Packard Company & Microsoft Corporation have a Zacks #3 rank, implying a short-term Hold recommendation.

SmithfieldExceeds Estimates

Smithfield Foods Inc. ( SFD ) posted adjusted earnings of 76 cents per share for the second quarter of fiscal 2012, which surpassed the Zacks Consensus Estimate of 69 cents by 10.1%.

The record increase in proforma earnings for the quarter was driven by strong fresh pork earnings and double-digit exports in spite of higher raw material costs.

GAAP earnings were reported at 74 cents per share, down by 14.0% from the net earnings of 86 cents per share in the year-ago quarter. The results include a charge for early extinguishment of debt of 2 cents per share.


The company announced that it is working hard to maintain its hog production business, and expects to see better results in the International segments. The company has seen strong momentum in its Pork segment supported by solid brands and positive industry fundamentals. Therefore, Smithfield targets a 3% sales volume growth in the packaged meats business in fiscal 2012.

Smithfield, together with its subsidiaries, engages in the production of hog, and processing of pork and beef worldwide. The company offers fresh pork products, packaged meat products, dry meat products and ready-to-eat foods. Smithfield Foods is also involved in turkey production and hatchery operations.

Management has undertaken restructuring initiatives in an effort to save costs and boost profitability, which augur well for future operating performance. Further, the company's vertical integration and product mix help increase margins. We maintain our long-term recommendation on Smithfield at Outperform, while the company has a Zacks #1 Rank, implying a short-term Strong Buy rating.

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SMITHFIELD FOOD ( SFD ): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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