E*Trade Financial Corporation (NDAQ:ETFC) announced that its quarterly net income jumped 37% to a record $176.7 million in an 8K filing with the SEC today. The news comes after many other players in the brokerage industry have experienced similar successes, along with widespread gains in the overall financial industry. The company also reported revenues of $627 million with a profit margin of 43% - in line with last year. Chief Operating Office Jarrett Lilien commented on the results, saying that "all parts of the model performed well, with organic customer growth, more assets and cash coming in and more trading". The company said that it wants to attract more mass-affluent customers and expand internationally, opening the door to possible M&A activity. While the company's current forecasts of $1.65 to $1.80 are based on purely organic growth, they did not discount the possibility of utilizing acquisitions to reach its targets more quickly.

E*Trade Financial Corporation's principal activities are to provide differentiated trading, investing, banking and lending products, primarily through the Internet and other electronic media. It operates in two segments: The Brokerage segment provides services including automated order placement, execution of market and limit equity orders. It also includes access to nearly 5,000 non-proprietary and proprietary mutual funds; futures; bond trading and proprietary bond funds. It provides individual retirement accounts; college savings plan products; real-time market commentary and stock option plan administration products and services. The Banking segment provides consumer banking products and services. The lending services include first and second mortgage, refinance of existing mortgage and home equity loan.

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Ceridian Corporation (NYSE:CEN) shares moved up $1.36, or 4.85%, to $29.42 today on news that Bill Ackman's Pershing Square has taken a more activist stance in its investment. The 11.3% holder also disclosed a letter in their Schedule 13D filing with the SEC that expressed concern about a number of recent developments, particularly the departure of key Comdata personnel and a change in the company's strategic direction. Consequently, the hedge fund recommended that the company spin off Comdata to shareholders and focus on improving Ceridian's remarkably low margins, lackluster customer service, weak sales force, and poor technological infrastructure. Finally, Pershing Square announced their intention to nominate their own slate of directors to the company's board in order to enforce these changes and deliver shareholder value.

Why does a spin off of Comdata make sense for shareholders? Well, we must first remember that spin offs in general tend to outperform the overall market due to the way in which they are structured. Often times, parent company shareholders tend to immediately sell shares they are granted in the new spin off. Consequently, there is unjustified downside pressure on the new company's stock, which creates value for the enterprising investor. Aside from this fact, the separation of Comdata from Ceridian also makes a lot of sense. The two businesses share almost no synergies and are even located in different geographical locations. Moreover, Ceridian's poor performance has been a drag on Comdata's exemplary performance - a major contributing factor to Comdata's managements' possible departure from the company.

The spin off of Comdata would also provide Ceridian with a pile of cash that they could use to improve their own operations. The transaction would also allow Ceridian to unload some of its long-term debt on to the new entity (a common practice in spin off scenarios). Combined, the cash and savings generated from this transaction would allow Ceridian to institute changes aimed at improving the company's low margins, customer service, sales force, and technological infrastructure. Also, given Bill Ackman's history, he may decide to petition to the company to issue a special dividend to return some of this money to shareholders.

Overall, this is a great opportunity for investors to catch a ride with Bill Ackman, who is one of the most successful activist investors of our time; CEN is definitely a stock to watch as the January 23rd proxy deadline approaches.

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Pearson Plc (NYSE:PSO) moved up $0.79, or 5%, to $16.46 during the past two days on speculation that the company could be the target of a leveraged buyout. "The Business" fueled this speculation after reporting that private equity firm Kohlberg Kravis Roberts (KKR) was considering a $13.7 billion bid for the publishing company - a 4% premium to yesterday's close. However, Stifel Nicolaus discredited this rumor by stating: "Our SOTP analysis suggests the company can do better. Based on purchase price multiples involving comparable assets in recent transactions, we derive a fair value ranging from $17 at the low end to $23 at the high end. We would also note that according to the report, KKR has yet to make contact with Pearson, and thus Ј7 billion is merely a number at this point". Currently the company is trading below enterprise value with $1.59 per share in cash and very little debt. While this makes PSO an attractive takeover target, the company's PEG of 2.15 makes it somewhat overvalued. Regardless, this is definitely a stock worth watching.

Pearson plc. The Group's principal activity is providing information for the educational sector, consumer publishing and business information. It operates through its five business segments, School, Penguin, Higher Education, FT Publishing and IDC. Also, it has a business group, Professional. It brings together a number of education publishing, testing and services businesses.

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InFocus Corporation (NDAQ:INFS) may now face shareholder retribution after failing to demands made by 11.2% holder Caxton Associates. In a Schedule 13D filed yesterday, Caxton said that "as a result of the concerns previously expressed by the reporting persons in this Schedule 13D, and in light of the unsatisfactory conversations in the fourth quarter of 2006 between representatives of the reporting persons and members of the board and the company's operating management, the reporting persons now intend to call a special meeting of the company's shareholders and to seek to replace a majority of the current members of the board". The fund subsequently filed a Schedule 14A, indicating that it would be soliciting materials from the company in order to conduct a proxy battle.

What are these past concerns? Well according to prior Schedule 13D filing:

"The Reporting Persons believe that the intrinsic value of the Company, and the amount a strategic or financial buyer would pay to acquire the Company, is significantly greater than the current market value of the Common Stock.  The Reporting Persons believe that this gap in value has resulted from the implementation by the Company's Board of Directors (the "Board") of a flawed business plan that has been detrimental to shareholder value. The Reporting Persons accordingly believe that the following steps should be taken promptly in order to preserve and maximize shareholder value:

1. The Reporting Persons believe that the Company's poor performance is the result of mistakes made by management and the Board's failure to grasp the strategic realities of the environment in which the Company operates.  At this time, we believe that the Company's operating management is capable of effectively executing the Board's strategic vision should it be given adequate guidance and oversight.  We do not, however, believe that the Board, as currently constituted, is providing the necessary strategic thinking.  Therefore, we believe that, unless significant changes are made promptly, changes in the Board are in the best interests of all shareholders.

2. The Board should include individuals with strong ties to large shareholders, as well as industry, legal and/or financial markets expertise, which have a firm grasp of the realities of the markets in which the Company operates.  Unless significant changes are made, the Board should be restructured to consist of Mr. Ranson, at least two individuals drawn from among the Company's largest shareholders, and other independent directors with relevant industry backgrounds.

3. As part of the Company's announced exploration of strategic alternatives, the Board should develop an operating strategy that not only protects and enhances the hard asset value of the Company, but also will allow the Company to be cash flow positive under any foreseeable circumstances.  The Board should immediately work with management to develop a business plan that, among other things, permits revenue growth only at a reasonable cost, fixes or exits money-losing operations, and leverages the Company's valuable brand name franchise and considerable intellectual property assets.  This new business plan should be assessed against other available alternatives, including the possibilities of a sale or restructuring of the Company.

The Reporting Persons continue to examine all of their options with respect to the possibility of taking actions that they believe will enhance shareholder value, including the option of actively seeking to replace members of the Board."

Clearly Caxton and other shareholders have reason for concern, especially after the company failed to reply to the fund's demands. This move to solicit information and replace members of the board indicates the hedge fund's conviction in enforcing necessary changes. If the fund is successful, INFS could see significant upside. This makes Infocus a stock worth watching over the next few months as this situation unfolds.

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Corus Bankshares Inc. (NDAQ:CORS) will replace Digitas Inc. (NDAQ:DTAS) in the S&P SmallCap 600 index after the close of trading on January 24th. This comes after Digitas was acquired by S&P Global 1200 constituent Publicis Groupe SA in a deal expected to close on or about that same date, pending final approvals.

JDS Uniphase Corp. (NDAQ:JDSU) said that it sees Q2 revenues between $360 and $365 million, above their prior estimates ranging from $332 to $352 million and the consensus of $341.98 million.

Xilinx Inc. (NDAQ:XLNX) reported Q3 EPS of $0.26, which was 3 cents better than estimates. Meanwhile, revenues came in at $450.7 million versus a consensus of $451.17 million. The company said it sees Q4 revenues unchanged to down 5% versus Q3, which would be below the consensus of $472 million.

Corel (NDAQ:CREL) reported Q3 GAAP EPS of $0.37 (non-GAAP EPS is $0.52) versus a consensus of $0.43. Meanwhile, revenues in the fourth quarter of fiscal 2006 were $47.4 million, an increase of 4% over revenues of $45.6 million in the fourth quarter fiscal 2005.

IBM (NYSE:IBM) reported Q4 EPS of $2.26 versus a consensus of $2.19. Meanwhile, revenues were $26.26 billion versus a $25.67 billion consensus.

Capital One (NYSE:COF) reported Q4 EPS of $1.14 versus a consensus of $1.24. The company said it sees FY07 EPS between $7.40 and $7.80 versus an $8.11 consensus.

General Electric Company (NYSE:GE) and Abbott (NYSE:ABT) entered into a definitive agreement for GE to acquire Abbott's primary in vitro diagnostics businesses and Abbott Point-of-Care diagnostics business (formerly known as i-STAT) for $8.13 billion in cash.

Guess?, Inc. (NYSE:GES) raised its earnings per share guidance for the fourth quarter ended December 31, 2006 to a range of $0.91 to $0.93, versus previous guidance of $0.65 to $0.67 (consensus stands at $0.72). Meanwhile, the company raised its earnings per share guidance for the fiscal year ended December 31, 2006 to a range of $2.60 to $2.62, versus previous guidance of $2.34 to $2.36 (consensus stands at $2.41).

Briggs & Stratton Corporation (NYSE:BGG) reported a Q2 loss of $0.12, which was 7 cents worse than estimates. Meanwhile, revenues were $423.1 million versus a $466.46 million consensus.

Hastings Entertainment, Inc. (NDAQ:HAST) reported sales results for the two month holiday period ended December 31, 2006. At $127.7 million, total sales increased 2.0% over the same period in the prior year, but were lower than the company's internal projections.

Merrill Lynch & Co. Inc. (NYSE:MER) reported Q4 EPS of $2.41, above the consensus of $1.91. Meanwhile, revenues came in at $8.6 billion versus a consensus of $7.73 billion.

Equity Office Properties' (NYSE:EOP) future remains uncertain after private equity groups and competitors continue to circle the largest commercial renter in the U.S. CNBC reported today that a consortium consisting of Vornado (NYSE:VNO), Barry Sternlicht's Starwood Capital, and Leon Bluhm's Walton Street Capital are planning to make an acquisition bid within the next 24 hours. Meanwhile, the Financial Times is reporting that Cerberus Capital Management dropped out of the consortium dropped out after a weekend of talks but could still come back at a later stage, although that is not likely. Many others familiar with the situation said the enormous amount of liquidity in the marketplace meant another investor could still be found to replace Cerberus. This stock is definitely one worth watching closely as the February 18th deadline for additional bids draws closer. The current offer from Blackstone stands at $48.50 per share, while the stock trades at $50.69, up 1.69% in today's trading.

Equity Office Properties Trust (Equity Office) is a real estate investment trust (REIT) that owns and manages of office properties. At December 31, 2005, Equity Office owned buildings in 22 markets and 101 submarkets, including its 17 core markets, which are Atlanta, Austin, Boston, Chicago, Denver, Los Angeles, Oakland/East Bay, Orange County, New York, Portland, Sacramento, San Diego, San Francisco, San Jose, Seattle, Stamford and Washington, D.C. Equity Office owns substantially all of its assets and conducts substantially all its operations through EOP Operating Limited Partnership (EOP Partnership). As of December 31, 2005, Equity Office owned 89.7% of EOP Partnership through its ownership of partnership units in EOP Partnership.

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IntercontinentalExchange, Inc. (NYSE:ICE) moved up $2.59, or 2%, to $131.78 today after conflicting analyst reports put pressure on the stock. The ordeal began when Wachovia downgraded ICE from "outperform" to "market perform", citing a stock priced with high expectations which could disappoint and lead the stock down in the near term. However the firm also raised their 2007 and 2008 estimates to $3.37 and $4.50 per share, accounting for full accretion of the NYBOT deal and far more robust oil futures trading. All in all, Wachovia believes the shares should trade between $135 and $140, or 29-30x 2008 earnings estimate. Meanwhile, Goldman Sachs retains a more optimistic outlook saying that the market continues to underestimate the growth potential of the exchanges volumes. The firm set their new 2008 earnings estimates at $5.50, which is 43% above consensus and 10% above the next highest estimate. Moreover, GS believes that the risk reward trade-off remains favorable on ICE, with a 2:1 ratio of upside to downside based on bull case 2008 EPS of $7.00 and bear case EPS of $3.85. Consequently, the firm said that it believes the shares should trade around $165, or 30x its 2008 estimates.

Both of these analysts make good point: Oil contract volume has been on the increase during the past few weeks as hedge funds have embraced short trades after OPEC failed to react to a $50/barrel price point. This, combined with strong existing futures volumes, should help ICE's EPS significantly. However, many are quick to note that there also may be some downside pressure on Friday after trading restrictions are lifted for NYBOT insiders. Whether or not the stock will reach $160 remains to be seen; however, this is definitely a stock worth watching over the next few months.

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Encore Acquisition Company (NYSE:EAC) moved up $1.15, or 5.13%, to $23.70 today after the company announced that it would offer shares of its limited partnership interests in an initial public offering. The new entity is expected to own certain Wyoming oil and natural gas properties to be acquired from subsidiaries of Anadarko Petroleum Corporation and certain legacy oil and gas properties currently owned by Encore. This acquisition of Anadarko properties is valued at $400 million to be paid in cash, subject to customary purchase price adjustments. Encore said that the net proceeds from the initial public offering are expected to be used to repay indebtedness incurred in connection with the acquired properties.

Encore Acquisition Company (Encore) is an independent energy company engaged in the acquisition, development, exploitation, exploration and production of onshore North American oil and natural gas reserves. The Company's properties and oil and natural gas reserves are located in four core areas: the Cedar Creek Anticline (CCA) in the Williston Basin of Montana and North Dakota; the Permian Basin of West Texas and Southeastern New Mexico; the Mid-Continent area, which includes the Arkoma and Anadarko Basins of Oklahoma, the North Louisiana Salt Basin, the East Texas Basin and the Barnett Shale of north Texas, and the Rockies, which includes non-CCA assets in the Williston and Powder River Basins of Montana and North Dakota, and the Paradox Basin of southeastern Utah.

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Telik, Inc. (NDAQ:TELK) moved up $0.15, or 2.45%, to $6.26 this morning after Carl Icahn disclosed a 9.92% stake in a Schedule 13D filing with the SEC. The activist investor said that he believed the company's stock was undervalued and represented an attractive investment opportunity. Moreover, he said that his fund may engage management in discussions regarding the company's plans and prospects. Icahn is best known for orchestrating spin-offs and forcing special dividends in order to unlock shareholder value.

Telik, Inc., a biopharmaceutical company, engages in the discovery, development, and commercialization of small molecule drugs for the treatment of cancer and inflammatory diseases. Its lead product candidate TELCYTA is a small molecule cancer drug product designed to be activated in cancer cells that is currently in phase 3 clinical trials. While the company has no significant revenues at this point (since their product is still in development), they do have $146 million - or $2.79 per share - in cash with almost no debt. Consequently, the stock may be a risky buy at this point, but Icahn likely sees some value in the company's products or cash reserves. Regardless, this is definitely a stock worth watching over the next few months.

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Emergency Medical Services Corporation (NYSE:EMS) announced earnings guidance for the 2007 fiscal year ending December 31, 2007. The company expects full year diluted earnings per share between $1.11 and $1.18 versus a consensus of $1.09.

Charming Shoppes, Inc. (NDAQ:CHRS) said consolidated net sales for the nine weeks ended December 30, 2006 increased 3% to $654.4 million. Meanwhile, consolidated comparable store sales for the company's retail store brands decreased 2% during the nine weeks ended December 30, 2006.

CACI International Inc (NYSE:CAI) expects revenue for FY07 to range between $1.875 billion and $1.950 billion versus a consensus of $2.02 billion. Meanwhile, diluted earnings per share is now expected to range between $2.45 and $2.65 versus a consensus of $3.00.

RIDEX Corporation (NDAQ:IRIX) said it completed the acquisition of the aesthetics business of Laserscope pursuant to the terms of the definitive agreement.

The Mills Corporation (NYSE:MLS) and Brookfield Asset Management Inc. (NYSE:BAM) announced today that The Mills has entered into a definitive agreement pursuant to which Brookfield will acquire The Mills for cash at a price of $21 per share, representing a total transaction value of approximately $1.35 billion for all of the outstanding common stock of The Mills and common units of The Mills Limited Partnership, and approximately $7.5 billion including assumed debt and preferred stock.

Quanex Corporation (NYSE:NX) expects to report fiscal first quarter 2007 diluted earnings per share from continuing operations in a range of $0.45 to $0.50 when it reports results on February 27, 2007. The current consensus stands at $0.42.

Parker-Hannifin (NYSE:PH) reports Q2 earnings of $1.55 per share, ex-items, above the consensus of $1.40. Meanwhile, revenues came in at $2.51 billion versus the consensus of $2.46 billion. Sees FY07 EPS of $6.35 to $6.75 versus prior guidance of $6.05-6.45 and the consensus of $6.38.