Wyndham Worldwide (NYSE:WYN) has increases its guidance for the 2006 total revenues from a range of $3.67 billion to $3.77 billion to a range of $3.79 billion to $3.84 billion.  Meanwhile, revenue consensus remains at $3.8 billion.

Isilon Systems, Inc. (NDAQ:ISLN) opened for trading this week, trading at $22.38 after pricing at $13 per share, above the expected $11 to $12 range which was raised from $8.50 to $9.50.

Affymax, Inc. (NDAQ:AFFY) IPO'd this week, trading at $30.40 after pricing 3.7 million shares at $25.00 per share, above the expected range of $22 to $24.

Zoltek Companies, Inc. (NDAQ:ZOLT) reported $92.4 million for 2006's net sales for the fiscal year, an increase of 67% from net sales of $55.4 million in fiscal 2005. Meanwhile, the current FY06 revenue consensus is $103.23 million.

Overstock.com, Inc. (NDAQ:OSTK) announced that institutional investors have agreed to purchase over 2.7 million shares of its common stock for $14.63 per share.

USA Truck, Inc. (NDAQ:USAK) announced that it sees full year 2006 fully diluted earnings per share of $1.08 to $1.12, versus the consensus of $1.25. Revenue, excluding fuel surcharges, is expected to be in a range of $378 million to $383 million, versus the consensus of $478.85 million.

ChipMOS Technologies, Ltd. (NDAQ:IMOS) raised its prior guidance for the fourth quarter ending December 31, 2006. The company now expects the revenue for the fourth quarter of 2006 to be in the range of US$176 million to US$181 million, compared to prior guidance of US$168 million to US$172 million.  

Illinois Tool Works Inc. (NYSE:ITW) announced that it would decrease its forecasted earnings range to $0.72 to $0.74 from the prior range of $0.77 to $0.81. As a result, the company's full-year forecasted earnings range is now $2.96 to $2.98 compared to the prior range of $3.01 to $3.05. Current Q4 EPS consensus is $0.78 while the FY EPS consensus is $3.02.

The Black & Decker Corporation (NYSE:BDK) announced that their net earnings per diluted share would be about $1.30 to $1.35 for the fourth quarter of 2006 and approximately $6.50 for the full year, compared to a consensus of $1.86 and $7.01, respectively. The company also noted that it expects to report a sales decline of approximately 8% for the quarter.

Weyerhaeuser Co. (NYSE:WY) moved higher the last few days after Franklin Mutual Advisers, a 7.6% holder in the company, increased its pressure on Weyerhaeuser to convert itself from a C-corp to a Real Estate Investment Trust (REIT). According to the hedge fund, the move would enable the company to avoid unnecessary double taxation along with a host of other disadvantages to running the company as a C corporation as opposed to a REIT. As a result, the company could save as much as $24 per share in value that would be lost between now and 2010.

Franklin submitted their full proposal today in a 13D/A filing with the SEC:

"Franklin Mutual Advisers (FMA) owns approximately 18 million shares of Weyerhaeuser stock and has been a 13-d filer on the company since April 2005. We acknowledge the positive steps the company has taken over this period to restructure the business, including the sale of the Fine Paper business that is scheduled to close during the first quarter of 2007.

However, FMA continues to believe that the share price of Weyerhaeuser reflects a substantial discount to the intrinsic value of its underlying assets and core businesses. While the restructuring actions taken to date have been rational and objective, we believe the management and board of directors of Weyerhaeuser must act with an increased sense of urgency and accelerate its efforts to enhance and crystallize this intrinsic value for the benefit of all shareholders.

These steps include (1) a corporate reorganization that will eliminate the tax disadvantages of owning timber properties in a C corporation and (2) accelerating the time frame for the planned restructuring of the containerboard business.

Despite the best efforts of the company and other similarly situated entities, it now appears that the tax law will continue to favor holding timber properties in entities such as Timber Investment Management Organizations (TIMOs) or Real Estate Investment Trusts (REITs). The structural disadvantages to Weyerhaeuser include the inability to competitively bid on timberlands undergoing a sale process, a higher weighted average cost of capital and the full double taxation of timberland generated earnings. According to a recent report from one major Wall Street analyst, by 2010 the current structure, as opposed to a REIT structure, would destroy an incremental $24 per share of shareholder value, or nearly 35% of today’s equity value. FMA strongly believes Weyerhaeuser must immediately take steps to eliminate this disadvantage, including possibly converting the current corporate structure to a REIT.

Many paper and forest product companies such as Rayonier, Potlatch, Georgia Pacific, International Paper and the former Boise Cascade have become more competitive, realized substantial operating benefits and experienced significant share price appreciation by either converting to a REIT or by selling their timberlands. For example, since becoming a REIT in January, 2004, Rayonier produced (according to Bloomberg) an annual equivalent return (including reinvestment of dividends) of 20.4% through 12/12/06. Potlatch has produced (according to Bloomberg) an annual equivalent return (including reinvestment of dividends) of 25.3% through 12/12/06 since becoming a REIT in January, 2006. In contrast, Weyerhaeuser has generated (according to Bloomberg) an annual equivalent return (including reinvestment of dividends) of 3.9% since January, 2004. While we are not today suggesting that Weyerhaeuser divest its timberlands, we are strongly suggesting that the Company must modify its corporate structure to become more efficient vis-à-vis the REIT structure. FMA believes that this step, along with the closing on the sale of the Fine Paper business and executing and accelerating the current restructuring plans in the containerboard business, will enhance shareholder value over the long-term." (Read More)

Weyerhaeuser immediately responded in a subsequent 8-K filing with the SEC, citing uncertainties surrounding current legislation as their reason for hesitation. The 8-K filing also noted several other actions that the company has taken to actively unlock shareholder value:

"Weyerhaeuser’s Board of Directors and management are firmly committed to improving the company’s financial performance and enhancing shareholder value. Our ongoing review of options to create additional value has included a detailed analysis of the benefits, complexities, and risks of various alternative structures. That review has led us to the determination that the most value creating alternative would be equitable tax treatment for C-corp. timberlands owners. We will continue to actively support the industry initiative for tax legislation, however, in light of the uncertainties surrounding a legislative remedy we are now revisiting alternatives.

As you note, during the last 18 months we have taken action to restructure Weyerhaeuser’s operations to create value for shareholders. In August 2006, we announced a definitive agreement to combine our Fine Paper business and related assets with Domtar. The transaction will give Weyerhaeuser shareholders 55 percent ownership in the new company, which will be the North American market leader in fine paper, and includes a $1.35 billion cash payment to Weyerhaeuser. The transaction with Domtar will provide Weyerhaeuser shareholders with the opportunity to participate in the benefits of owning the combined company. This compelling combination is expected to be tax-free for Weyerhaeuser and its shareholders and is on-track to close in the first quarter of 2007.

With regard to the Containerboard Packaging restructuring, the benefits of increased customer service and more efficient asset utilization are already being realized. Upon completion of the restructuring, we expect to achieve substantial earnings improvements. We share your sense of urgency and are committed to completing the restructuring of these operations in the shortest time possible.

In addition to the actions discussed above, we strategically grew our real estate business through the acquisition of Maracay Homes to give us access to the high-growth markets of Phoenix and Tucson, and expanded existing real estate operations into the Portland, Oregon and Sacramento markets. We are also growing our timberlands in South America and we have begun a process of constructing converting facilities.

The Board has demonstrated a strong commitment to returning value to shareholders. Over the last 18 months, we have increased Weyerhaeuser’s annual dividend twice to $2.40 per share, an increase of 50 percent. We have also continued to aggressively execute on Weyerhaeuser’s 18 million share repurchase program." (Read More)

While the company has a very competent management team that is actively increasing shareholder value, Franklin's recommendations becoming public only increase the pressure on the company to institute new restructuring plans aimed at unlocking shareholder value. This pressure has already materialized in Weyerhaeuser's announcement late Thursday that it will revamp its lumber operations in Washington to be more competitive. Many analysts are also excited by the value potential of the C-corp to REIT proposal along with other structural changes, which caused a series of upgrades lately by USB and others. This long-term value potential makes WY a stock worth watching!

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Rayonier Inc. (RYN)
Wausau Paper Corp (WPP)
Buckeye Technologies, Inc. (BKI)

Isilon Systems, Inc. (NDAQ:ISLN) soared 72% higher to $22.75 in its first day of trading after being priced at $13 per share. That number was already above the company's expected range of $11 to $12, which was raised not long ago from $8.50 to $9.50. Is this stock worth the price? Well, let's take a look at the company and its industry. According to their S-1/A filing with the SEC:

"We are a leading provider of clustered storage systems for digital content. As more information is recorded and communicated in images and pictures rather than text and words, the volume of digital content — which includes video, audio, digital images, computer models, PDF files, scanned images, reference information, test and simulation data and other unstructured data — is growing rapidly. Enterprises are utilizing this digital content to create new products and services, generate new revenue streams, accelerate research and development cycles and improve their overall competitiveness. Recognizing the growth and importance of this type of data, we designed and developed our clustered storage systems specifically to address the needs of storing and managing digital content. Our systems are comprised of three or more nodes. Each node is a self-contained, rack-mountable device that contains industry standard hardware, including disk drives, a central processing unit, or CPU, memory chips and network interfaces, and is integrated with our proprietary OneFS®  operating system software, which unifies a cluster of nodes into a single shared resource. To date, we have sold our clustered storage systems to more than 275 customers across a wide range of industries.

The worldwide market for external disk storage systems will grow from approximately $17.4 billion in 2005 to approximately $22.7 billion in 2010, according to estimates from a May 2006 market analysis report by International Data Corporation, or IDC. The market for storage systems dedicated to digital content is estimated to grow at a much faster rate. According to a January 2006 research report by the Enterprise Strategy Group, or ESG, certain industries including multimedia, oil and gas, scientific research, healthcare, personal Internet services and software development will experience rapid growth in file-based storage capacity. For example, in disk-based digital archiving, which is one portion of the market our systems address, ESG forecasts that the demand for storage capacity will grow from 377 petabytes in 2005 to nearly 11,000 petabytes in 2010, representing a 96% compound annual growth rate, with the substantial majority of this stored information comprised of unstructured content, such as office documents, web pages, digital images and audio and video files." (Read More)

The company's primary product is OneFS, which it describes as:

"OneFS® is Isilon's patent-pending distributed file system that provides the intelligence behind Isilon® clustered storage. It combines the three layers of traditional storage architectures - file system, volume manager and RAID - into one unified software layer, creating a single intelligent file system that spans all nodes within a cluster. OneFS combines mission-critical reliability and high availability with state-of-the-art data protection to help storage administrators worry less and do more."

Certainly a 96% compounded growth rate through 2010 represents a growth industry. Moreover, Isilon Systems already has more than 275 customers and is a solid player in this market with an innovative product. However, the company noted that it experienced a $19.2 million loss in 2005 and a $10 million loss in the first six months of 2006. Given their short operating history, it is difficult for them to project future earnings; however, their industry outlook and products appears promising. This is definitely a stock to watch during the coming year!

MathStar (NDAQ:MATH) -- CEO Douglas Pihl disclosed, in a form 4 filing with the SEC, that he had purchased 20,000 shares on December 12th at $3.99, bringing his total stake in the company to 1,537,836. MathStar shares have declined from $6.00 per share in July of this year to their current levels around $4.15 per share; however, the stock has recently formed a high-volume base between $3.70 and $4.15. This nearly $80,000 insider purchase could indicate a possible turnaround, making MATH a stock worth watching.

Cimarex Energy Co. (NYSE:XEC) -- Chairman and CEO F. H. Merelli disclosed, in a form 4 filing with the SEC, a 20,900 share purchase today at prices ranging from $37.10 to $37.36, bringing his total stake in the company to 280,646 shares. The oil and gas exploration company faced a decline from $45 to $35 per share in 2006 as the company faced exploration and production issues. Recent insider buying could indicate that these issues will soon be resolved, which could mean share appreciation. This is definitely a stock to watch.

Advanced Microdevices Inc. (NYSE:AMD) CFO Robert Rivet met with analysts today in New York to discuss the company's financials and industry prospects. Investors and analysts were particularly focused on AMD's recent acquisition of ATI, which some thought could hurt the company's balance sheet. However, Rivet dispelled these concerns, stating that cost cuts from the ATI deal were much higher than expected and projected that ATI would add $80 million to the company's $160 million in new revenue this year as a result of the acquisition. The CFO also noted that he expects laptop chip demand to outpace desktop chips in 2007 - something which the company is well prepared for. Meanwhile, AMD CEO Ruiz told analysts, "The future is incredibly bright". These comments moved the stock up over 4% in intraday trading.

But is AMD a buy yet? Well, the company's shares have cut in half from $40 to $20 per share in 2006, after lackluster results combined with the then-questionable purchase of ATI caused investors to dump their shares, and Intel Corporation (NYSE:INTC) shares also faced a steady decline from $25 to $20 per share during the same period. But where do the two companies stand in terms of valuation? Well, one of the best ways to quickly determine valuation is using the PEG ratio, because it takes into account a company's growth rates. AMD currently trades with a PEG of 1.20 while INTC's stands at 2.06, with the industry PEG at 1.57. This indicates that AMD shares remain undervalued in relation to their competition, and particularly in relation to Intel. This discount was likely due to uncertainty surrounding the company's acquisition of ATI along with a poor industry outlook; but, with AMD's new projections today, along with their comments regarding the ATI cost savings, we could AMD shares return to industry valuations. This makes AMD a stock worth watching.

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GTSI, Corp (GTSI)
Transmeta Corporation (TMTA)

The Home Depot Inc. (NYSE:HD) has authorized the repurchase of $3 billion of outstanding shares through an accelerated share repurchase agreement.

Dell Inc. (NDAQ:DELL) is delaying their 10-Q filing with the SEC after it reported a probe into its accounting practices.

Adobe Systems Inc. (NDAQ:ADBE) reports Q4 EPS OF $0.33, in-line with estimates, with revenues coming in at over $682 million.  

Intuit Inc. (NDAQ:INTU) announced its intention to acquire Electronic Clearing House Inc. (NDAQ:ECHO) for $18.75 per share in cash, in a transaction worth approximately $142 million.  

E*TRADE Financial Corporation (NYSE:ET) announced 2007 earnings guidance of $1.65 to $1.80 per share on Total Net Revenue of $2.75 to $3.0 billion.

YRC Worldwide Inc. (NDAQ:YRCW) lowered their fourth quarter 2006 EPS to $0.95 to $1.05 and their full year 2006 earnings to $5.00 to $5.10 per share.

California Micro Devices (NDAQ:CAMD) expects revenue between $16.5 and $18.5 million compared to $19.6 million a year ago. Current Q3 revenue consensus is $17.7 million.

Asta Funding, Inc. (NDAQ:ASFI) report Q4 EPS of $0.93, versus the consensus of $0.78; revenues came in at $30.5 million versus the consensus of $25.3 million.

Thermo Fisher Scientific Inc. (NYSE:TMO) is raising its 2007 EPS to a range of $2.35 to $2.45, from $2.27 to $2.37. Current FY07 EPS consensus is $2.36; revenues in 2007 are expected to grow to $9.4 to $9.5 billion vs. current consensus of $9.36 billion.

Lehman Brothers Holdings Inc. (NYSE:LEH) reports Q4 EPS of $1.72 versus the consensus of $1.68; revenues came in at $4.5 billion versus the consensus of $4.41 billion.

Bear Stearns Companies Inc. (NYSE:BSC) reports Q4 EPS of $4.00, above the consensus of $3.36; revenues came in at $2.4 billion versus the consensus of $2.2 billion.

Magellan Health Services, Inc. (NDAQ:MGLN) expects to generate net revenue in the range of $2.05 billion to $2.15 billion (consensus is $2.02 billion) for the 2007 fiscal year; net income in the range of $68 million to $83 million.

Ryerson Inc. (NYSE:RYI) may find itself in trouble soon after Harbinger Capital disclosed a 9.7% stake in the company and voiced their concerns with management and the company's board of directors. The materials distribution company went from a high of $31 earlier this year to its current levels in the low $20s, as its lackluster numbers failed to impress investors. These numbers have also prompted investors like Harbinger to take a more active role in unlocking shareholder value.

In the Purpose of the Transaction section of the SC13D form filed today, Harbinger elaborated on their problems with the company:

"The Reporting Person initially reported their investment on a Schedule 13G on November 27, 2006. Since that time, the Reporting Persons have examined the financial and operating performance of the Issuerand have grown  increasingly concerned that the board of directors and senior management of the Issuer have not been appropriately vigilant in their management of the Issuer, particularly with respect to its lack of focus on profitability and the management of inventory.

The Reporting Persons observe that the Issuer's peer companies have been consistently successful in turning inventory more rapidly than the Issuer and have also consistently earned high gross, operating and net margins throughout the business cycle. Given this persistent under performance by the Issuer since it was established as a stand-alone enterprise in 1999, the Reporting Persons have concluded that the board of directors has provided insufficient oversight of management's ability to deliver acceptable performance in the key factors that are critical to maximizing the value of the Issuer's existing asset base, geographic presence and product portfolio. The Reporting Persons believe that the current board of directors, while talented and undoubtedly qualified in general business matters, lacks the specific qualifications necessary for understanding the value drivers within the metals processing and distribution business which drive acceptable shareholder returns.

As a result, the Reporting Persons are considering a range of actions by which they may be able to encourage the Issuer to improve its performance. Such activities may include taking a position (including by contacting management and other shareholders of the Issuer) with respect to potential changes in the operations, management, or capital structure of the Issuer as a means of enhancing shareholder value. Such suggestions or positions may include one or more plans or proposals that relate to or would  result in any of the actions required to be reported herein. In addition, the Reporting Persons are also considering nominating one or more persons for election to the Issuer's board of directors at the Issuer's next annual meeting of shareholders." (Read More)

Ryerson is currently trading at just 8.15x earnings compared to an industry average 16.36x, making the company's stock worth $44.50 at the industry's valuation. Harbinger maintains that this poor valuation is a result of lackluster growth stemming from poor inventory turnover and low margins. If the company is able to improve these numbers, it could mean significant returns for shareholders. This makes RYI a stock definitely worth watching closely into 2007!

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Midwest Air Group, Inc. (AMEX:MEH) said it has received an unsolicited takeover bid from AirTran Holdings (NYSE:AAI) today for $11.25 per Midwest share in cash and and stock, in a deal worth $290 million. The bid was first discussed back in October when AirTran Chairman and Chief Executive Joe Leonard sent a letter to Midwest executives stating that he was interested in such a transaction. On December 6th, the company issued a response to this letter stating that the offer would not be in the best interest of shareholders. The communications were made public today in an 8-K filing by AAI, sending the stock up over 20% to settle at around $11 per share. AirTran said that it went public with the offer in part because of Midwest's "extensive" defenses and opposition to the proposal.

Would the deal make sense? Well, a combined company would have pro forma revenue of about $3 billion in 2007 and 1,036 daily departures with 173 unique markets between 74 cities across the U.S., according to AirTran. Furthermore, they said that a deal could be completed by the end of the first quarter of 2007 and would add to earnings by the end of the first full year following the close. This makes it a very tempting target for AirTran, who said that they could offer more if they were able to conduct due diligence. The airlines have also been on fire recently: This is the second hostile bid in the airline industry in recent weeks, after U.S. Airways offered $8.5 billion in cash-and-stock to acquire Delta Air Lines. And there is also continued speculation surrounding Northwest Airlines and Continental Airlines, who are rumored to be considering M&A themselves. Combined, these factors make MEH a stock to watch closely during the coming months.

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Cost-U-Less, Inc. (NDAQ:CULS) is under pressure yet again from Monarch Activist Partners as the hedge fund increased its stake and again demanded that the company put itself up for sale. The hedge fund first got involved with Cost-U-Less back in September, when it issued its first 13D filing disclosing a 5.4% stake in the company with purchases dating back to early August of this year. Since then, Monarch has held multiple discussions with management over the phone discussing ways in which the company could unlock shareholder value. In particular, the hedge fund urged management to consider putting the company up for sale. Monarch filed its most recent 13D/A filing yesterday, which disclosed a 6.4% stake in the company and elaborated on their reasoning for suggesting a sale of the company. In a letter attached to the filing, they said:

"While we appreciate your desire to grow the business organically, it is apparent that the market refuses to assess fair value to the company in its current form. A quick review of your peer group clearly states this point. Currently, Pricesmart (PSMT), your self-acknowledged closest competitor, trades at an Enterprise Value to EBITDA multiple of close to 16 times, whereas CULS trades at approximately a 4.5 multiple. Taking a very conservative valuation approach by applying a 40% discount to the median EBITDA multiple of your industry peer group, CULS is worth at least $12 a share.

Compounding matters, the business, according to your latest earnings release, is dealing with a 9% increase in operating expenses which is largely attributed to rising utility expenses, an issue that does not lend itself to a quick resolution. Outside of operating expenses, the cost of being public with Sarbanes Oxley expenses and other regulatory costs makes the rationale of "going it alone" far less viable.

We fail to see how even the most ambitious growth plan will resolve the deep multiple discount the market attributes to CULS. Not to mention, given the capital required to open each new store combined with all the site specific requirements, rapid expansion appears highly improbable. In light of the issues raised in this letter and as a significant shareholder we ask you and the Board to engage the services of an investment banker to facilitate the sale of the company. While you have stated that the Board continues to look at all options and keeps an open mind to any potential offer, it is time for the company to take a far more proactive stance." (Read More)

According to this analysis, CULS should be worth near $12 a share, which is a hefty 44.75% higher than the stock's current price. Monarch also noted that if management failed to acknowledge their advice, they may choose to seek board representation - in other words, they threatened a proxy battle. Those considering investment in CULS should know that the stock is thinly traded, and therefore subject to increased volatility. Moreover, if management decides against putting the company up for sale (which is a definite possibility), a proxy battle is often a long and drawn out process. And finally, there is no guarantee that there will be bidders in the $12/share range. However, if Monarch is able to convince or force management to put the company up for sale, it could mean a very nice 40%+ return on investment in (likely) less than a year. This makes CULS a stock worth watching closely into 2007.

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Nasdaq Stock Market, Inc. (NDAQ:NDAQ) took a more hostile stance in its bid for the London Stock Exchange today, refusing to raise its bid higher than $5.3 billion unless the LSE's board accepts a friendlier approach or another bidder emerges. Moreover, they appealed to shareholders by stating that if they received support from just an additional 20% of the outstanding shares, they would alter the offer to "unconditional" (making it a hostile bid). The LSE quickly responded today by saying they would issue a statement to shareholders soon explaining why they rejected Nasdaq's buyout offer. Currently, Nasdaq owns approximately 30% of the LSE, giving it significant leverage over other potential bidders. This, combined with the fact that the financing required on this transaction would total more than $5.03 billion, make the probability of a significantly increased bid rather unlikely. Shareholders may also get a little nervous if the transaction fails since the company nearly doubled this year, thanks in part to the M&A speculation surrounding the exchange. Regardless, these are definitely two stocks to keep an eye on between now and January 11th (when the offer expires).

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