AeroVironment, Inc. (NDAQ:AVAV) shares moved up $6.93, or 40.76%, to $23.93 on its first day of trading on the Nasdaq. This jump came after the stock priced at $17 per share, which was one dollar above the originally anticipated range of $14 to $16 per share. The company designs, develops, and produces advanced unmanned aircraft systems for the Department of Defense along with fast charge systems for industrial vehical batteries for commercial customers. AeroVironment believes that both of these markets are still in the early stages of development and have significant growth potential. Moreover, they insist that several other technologies that are in their research and development pipline will also emerge as new growth platforms in the future. Given their successful operation and impressive annual revenue growth rate of 71%, the company believes that they have proven their ability to invent and deliver advanced solutions to help government and commercial customers operate more effectively and efficiently. Whether or not this justifies the jump we saw today remains to be seen; however, this is definitely a stock to keep an eye on as it matures.

TNS Inc. (NYSE:TNS) shares moved up $0.19, or 0.98%, to $19.65 today after Shamrock Activist Value Fund disclosed a 5.02% stake in the company and urged the Board of Directors to consider a $6/share special dividend. This news comes after the company recently disclosed that there were several buyers interested in acquiring the company, including the founder and former CEO who has already made a $20/share offer for the company. To this end, the Schedule 13D filed with the SEC also contained a letter with several other requests directed towards the company's board.

These requests included:

1. Disclosure of Key Financial Targets: We propose that the Board disclose EBITDA, FCF (free cash flow: operating cash flow less maintenance capital expenditures) and ROIC (return-on-invested capital) targets for FY 2007 and FY 2008. With this critical information, shareholders can judge for themselves the performance of management and the Board and whether or not an offer for the Company is adequate.
2. Long-Term Incentive Compensation: A Board’s design and implementation of an overall compensation plan, particularly the long-term incentive elements, represent a vivid lens to its governance. We were disappointed that the most recent issuance of restricted stock had no alignment to internal financial metrics that, we believe, correlate to long-term shareholder value creation. I will send to you under separate cover a summary compensation “white paper” outlining a conceptual framework consistent with emerging best practices that seek to provide a meaningful relationship between pay and performance.
3. Capital Management Strategy: We urge the Board to consider distributing to shareholders approximately $150mm of cash or $6.00 per share. Because the Company has a solid customer base, and steady and recurring revenues, it should not require the current level of financial flexibility. We believe an overly capitalized balance sheet often results in poor capital allocation decisions and presents the opportunity for a financial buyer to capture value at the expense of the existing owners. Capital can be returned to shareholders through a variety of mechanisms: dividends, special dividends, share repurchase, etc. Importantly, the Board should seek to articulate a comprehensive capital management policy given the Company’s current corporate strategy.
4. Board Composition: We encourage the Board to recruit immediately two new independent directors. The directors should be selected through a disciplined process that specifies key skills and attributes that compliment those of the existing Board members and match well the strategic challenges and opportunities of the Company over the next several years. We also strongly suggest that you actively seek input in good faith from your shareholders during this process. Fresh perspectives seem vital and appropriate given the recent history at the Company.
   

Shamrock has clearly identified several key issues that need to be addressed before any M&A transactions. First, they noted that the company has an excess amount of cash that could be utilized by potential buyers at the expense of existing shareholders. To solve this issue, they recommended that the company issue a special cash dividend of $6/share to relieve the company of approximate $150 million worth of capital. Secondly, the activist hedge fund made requests aimed at increasing transparency and streamlining the company's costs in order to make it easier for investors to come up with a fair value for the company in the event that a buyer surfaces. Finally, Shamrock requested that two independent directors be found to assist the company in evaluating any strategic alternatives and actively represent shareholder interests in the future. Combined, these recommendations should help the company avoid low-ball offers while encouraging a fair valuation of the company's stock price. This makes TNS a stock worth keeping on the radar over the next few months!

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Electro Scientific Industries Inc. (NDAQ:ESIO) moved up $0.82, or 4.22%, to $20.26 this afternoon after the company's largest shareholder, Third Avenue Management LLC, changed their filing status from a Schedule 13G to a Schedule 13D. This more activist stance came as a result of the TAM's disappointment with the company's stock performance. Consequently, TAM recommended that the Board of Directors explore possible share repurchases and/or extraordinary dividends in order to unlock shareholder value. In a letter, the firm noted that "were the Board to consider a return of capital to shareholders, as I suggest it does, my sense is that some combination of a one-time dividend (say $2 per share) and a committed, long-term share repurchase program would effectively balance the needs of the corporation and those of the outside passive shareholders like TAM."

These demands come not long after Nierenberg Investment Management expressed similar beliefs in their Schedule 13D/A filing with the SEC. The hedge fund noted that ESIO shares could be worth as much as $40/share in three to four years if management took steps to unlock its value. In their analysis, they noted that ESIO has an additional $8 million of cash, not included in the cash and marketable securities lines of the balance sheet, $1 million from a subsequent insurance settlement and $7 million in a litigation bond in Taiwan, which increases cash per share to $7.73. Moreover they said that, if ESIO were to restore inventories and receivables to June 3, 2006 levels (and they believe both ultimately can be reduced even more), and if they were to add the above-mentioned $8 million cash, ESIO's total cash and marketable securities would be $8.21 per share, 43.2% of ESIO's share price at the close on January 9.

The fact is that ESIO is profitable, cash flow positive, and it has zero debt; however, its share price has dropped from a $25 high in 2006 to $19 before rebounding to its current levels. Consequently, two activist shareholders are now demanding that something be done to solve the problem, and this makes ESIO a stock that is definitely worth keeping an eye on over the new few months!

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Temple-Inland Inc. (NYSE:TIN) shares moved up $3.32, or 7.14%, to $49.82 in early trading today after Carl Icahn disclosed a 6.73% stake in the company in a Schedule 13D filing with the SEC. In the filing, Icahn said that stock is undervalued due to the conglomerate structure of the company. Consequently, he plans to recommend a divestiture or spin-off of one or more of the company's component businesses in a quant play could unlock millions in unrealized value for shareholders.

According to the Schedule 13D filing:

"The Reporting Persons acquired their positions in the Shares in the belief that they were undervalued due to, among other things, the conglomerate structure of the Issuer in which various disparate and non-complementary businesses are combined under one corporate umbrella. The Reporting Persons believe that this structure obfuscates the true value of the Issuer's assets and note that various analysts have issued sum of the parts analyses that imply a value for the Shares that is significantly higher than their current market price. The Reporting Persons intend to seek to have conversations with members of the Issuer's management to discuss ideas that management and the Reporting Persons may have to enhance shareholder value, which may include, among other things, the divestiture or spin-off of one or more of the Issuer's component businesses (which may include Guaranty Bank, the corrugated packaging business, timberland holdings, the building products business and/or the real estate division). The Reporting Persons may consider engaging in a proxy contest to attempt to replace one or more members of the Issuer's staggered board of directors with persons nominated by the Reporting Persons, but have as yet made no definite decision to do so."

Does this plan make sense? 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. The spin offs would also help the company raise a substantial amount of cash while unloading any debt that it may have (which is fairly common in these situations). Finally, given the fact that these businesses share very few synergies, it is likely that they will perform better as independently traded companies; therefore, spinning them off would unlock value for shareholders. Overall, these factors make TIN a stock definitely worth keeping an eye on over the next couple of months!

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EMC Corp (NYSE:EMC) reported Q4 earnings of $0.17 per share, one cent better than estimates. Meanwhile, revenues came in at $3.21 billion versus the consensus of $3.17 billion. The consolidated revenue for 2007 is expected to be at least $12.7 billion, versus the consensus of $12.65 billion. GAAP diluted earnings per share for 2007 are expected to be at least $0.64 versus a consensus of $0.63.

Tellabs (NDAQ:TLAB) reported Q4 non-GAAP EPS of $0.10, one cent better than estimates while revenues were down with $455 million versus the $463.7 million consensus. Tellabs expects the Q1 2007 revenue to be flat to slightly down from Q4 2006, in a range from $445 million to $455 million. The current consensus stands at $499.77 million.  

Radiation Therapy Services, Inc. (NDAQ:RTSX) said that it now expects that Q4 2006 revenues will be in the range of $76 to $78 million, an increase from its previously stated guidance of $74 to $77 million. The consensus is $76.85 million. The company expects a Q4 2006 net income of approximately $7.2 million, or $0.30 per share as compared to previously stated guidance of $0.36 per share to $0.38 per share. The consensus stands at $0.36.

BlueLinx Holdings Inc. (NYSE:BXC) said that it expects to report a Q4 net loss in the range of $0.16 to $0.22 per diluted share, with a consensus of a $0.03 loss) on revenue of approximately $945 million. The consensus stands at $1.09 billion.

Johnson & Johnson (NYSE:JNJ) reported Q4 EPS of $0.81, two cents better than estimates. Meanwhile, revenues were $13.68 billion, equal to the consensus.  

Energizer Holdings, Inc. (NYSE:ENR) reported Q1 EPS of $2.08 versus the consensus of $1.92. Meanwhile, revenues were $959.2 million versus $917.76 million consensus.

Avery Dennison (NYSE:AVY) reported Q4 earnings of $1.06 per share. Revenues came in at $1.41 billion versus the consensus of $1.4 billion. The company foresees FY07 EPS of $4.00 to $4.35 versus a consensus of $4.01.

Sun Microsystems, Inc. (NDAQ:SUNW) announced a $700 million private placement transaction with KKR Private Equity Investors, L.P., the publicly traded fund of Kohlberg Kravis Roberts & Co., one of the oldest and most experienced private equity firms. The investment will be in the form of $350 million of convertible senior notes due in 2012, and $350 million of convertible senior notes due in 2014. Closing of the investment is scheduled for January 26, 2007, and is subject to meeting customary closing conditions.

EZCORP (NDAQ:EZPW) reported Q1 EPS of $0.23, three cents better than estimates. Meanwhile, revenues were $91.7 million versus a $85.54 million consensus. For FY07, the company is raising their guidance to approximately $0.85 per share compared to $0.69 per share for fiscal 2006.

Hyperion Solutions (NDAQ:HYSL) reports Q2 EPS of $0.50, six cents better than estimates. Revenues were $222.9 million versus $212.35 million consensus. On a GAAP basis, the company currently expects total revenues in the range of $215 million to $220 million. The company also reported its updated outlook for fiscal year 2007. On a GAAP basis, the company currently expects total revenues in the range of $885 million to $895 million and diluted earnings per share in the range of $1.20 to $1.25, with the current FY revenue consensus at $859.18 million and the EPS consensus at $1.74.

Inter Parfums, Inc. (NDAQ:IPAR) said net sales for the final quarter of 2006 were approximately $90.3 million, or 37% ahead of the fourth quarter of 2005. The consensus is $76.43 million. The company is projecting 2007 net sales of approximately $365 million and net income of $20.4 million (2006 guidance is $16.9 million) or $1.00 per diluted share (the current consensus is $0.83).  

HOKU Scientific (NDAQ:HOKU) reported a non-GAAP Q3 loss of $0.06, four cents worse than estimates. Meanwhile, revenues were $1.1 million versus a $1.15 million consensus. The company expects revenue for the fourth quarter ending March 31, 2007 to be in the range of $1.0 to $1.2 million, while the current consensus stands at $1.15 million.  

Advanced Micro Devices Inc. (NYSE:AMD) reported Q4 loss of $0.04, versus a consensus $0.10 per share profit. Meanwhile, revenues came in at $1.77 billion versus the consensus of $1.73 billion. The company predicts Q1 revenues to be $1.6 to $1.7 billion versus a consensus of $1.82 billion.  

Candela (NDAQ:CLZR) reported Q2 EPS of $0.04, eleven cents worse than estimates. Meanwhile, revenues were $37.4 million versus the $42.9 million consensus.

Quanta Services, Inc. (NYSE:PWR) has increased its revenue for the fourth quarter ended December 31, 2006. Q4  revenues are expected to range between $590 million and $600 million compared to the prior guidance range of $500 million to $525 million. The current consensus is $518.65 million. Q4 adjusted earnings per share results are now expected to range between $0.19 and $0.20 per diluted share, compared to prior guidance of $0.11 to $0.14 per diluted share. The current consensus stands at $0.08.  

Yahoo! (NDAQ:YHOO) reported Q4 EPS of $0.16 (ex-items), three cents better than estimates. Revenues were $1.23 billion versus $1.22 billion consensus. The company predicts Q1 revenues between $1.12-1.23 billion versus $1.26 billion consensus, and  FY07 revenues between $4.95-5.45 billion versus $5.47 billion consensus.

Centex (NYSE:CTX) reported a Q3 loss of $1.96, four cents better than estimates. Revenues were $3.28 billion versus $3.12 billion consensus.

Digital Music Group, Inc. (NDAQ:DMGI) is higher in after-hours action after the comapny disclosed they entered into an agreement with Apple Computer, Inc. (NDAQ:AAPL), pursuant to which DMGI appointed Apple as a reseller of audio-visual files owned and/or controlled by DMGI, including television programs, feature length movies, shorts, and specialty content, within the relevant territory, and granted Apple certain rights to market and promote DMGI's Video Content. Shares of Digital Music Group are up 39% to $5.29 in AH action.

Cornell Companies Inc. (NYSE:CRN) shares moved up $0.31, or 1.61%, to $19.61 in today's afternoon trading session after Wynnefield Partners disclosed a 17.5% stake in the company Friday afternoon. This jump comes after Cornell agreed to be acquired by Veritas Capital for $18.25 per share in cash. The optimism was spurred when fund said that they "continue to believe that the shareholders would best be served if the company were to remain an independent entity and participate in the growth opportunities that exist in the private corrections industry". The fund also noted that Patrick Swindle of Avondale Partners stated in January that the company "appears to have meaningfully improved its position with what appears the addition of 500+ inmates based on our analysis ... these extra inmates could add $10.0 million in incremental revenue and $2.0 million to $2.5 million in incremental EBITDA at full capacity." Investors are betting the Wynnefield will be successful in blocking the company's merger with its 17.5% stake - a move which could result in a higher bid by Veritas. This makes CRN a stock worth watching closely over the next few months.

Cornell Companies Inc.'s principal activity is to provide correctional, treatment and educational services outsourced by federal, state and local government agencies. The Group provides a diversified portfolio of services for adults and juveniles through three operating divisions: adult secure institutional services, residential and community-based juvenile justice, educational and treatment services and adult community-based corrections and treatment services. The services of the Group include incarceration and detention, transition from incarceration, drug and alcohol treatment programs, behavioral rehabilitation and treatment and 3-12 education. The customers of the Group are Bureau of Prisons, U.S. Marshals Service, Department of Homeland Security, Bureau of Immigration and Customs Enforcement, county sheriffs, and city. As of 14-Feb-2005, the Group has 67 facilities in 16 states and the District of Columbia.

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Tribune Company (NYSE:TRB) shares moved down $0.33, or 1.08%, to $30.19 after the company hinted on Saturday that it might not go through with a sale of the company. William Osborn, chairman of the special committee to explore strategic alternatives, sparked the controversy by saying that the company was currently exploring its options which include "potential transactions involving third parties as well as actions the company may take alone". According to an article in the Chicago Tribune, these actions could include assuming a substantial amount of debt to issue a special dividend to shareholders, selling or spinning off broadcast assets, or assembling a smaller leveraged buyout than originally expected to take the company private.

This news comes after shares rose more than 4% last week when the company received a $31.70 per share offer disclosed by the Chandler Trusts - the company's largest shareholder. The offer - which remains the best on the table - involves $19.30 per share in cash combined with stock from a spin off of the company's broadcast and entertainment business. The Board of Directors is also reviewing two other bids, including a $500 million bid for 34% of the company by two billionaire investors as well as the Carlyle Group's bid for the company's broadcast assets. Regardless, this is definitely a stock to keep on the radar as many people have a keen interest in the company.

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Lodgian, Inc. (AMEX:LGN) moved up $1.15, or 9.6%, to $13.13 in early trading today after the company announced that it has initiated a review of possible strategic alternatives aimed at unlocking shareholder value. The company said it has retained Goldman, Sachs & Co. and Genesis Capital, L.L.C., to assist in the review. Lodgian also noted that they would not be providing updates on this process until it is completed and approved by the Board of Directors.

What can shareholders expect? Well, Lodgian is one of the largest independent owners and operators of full-service hotels in the United States. In December of last year, the company announced plans to reduce its portfolio to 43 core properties and said that it aims to sell 75% of its saleable properties by the end of the year. The sale of its 27 properties currently on the market is expected to generate between $115 and $122 million. This leaves the company with significantly reduced operating cash flows and a significant amount of extra cash. Typically, companies in this situation will approve measures to distribute this extra cash to shareholders - like instituting a dividend. Another possibility is spinning off the company's property holdings into an REIT, shielding them from a lot of taxes and unlocking the properties' true value. Finally, there is always the possibility that the company will put itself up for sale in a market ripe with acquisitions. Regardless, this is definitely a company to keep an eye on as it moves to adopt measures to unlock shareholder value.

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The controversy surrounding Compania Anonima Nacional Telefonos de Venezuela CANTV (NYSE:VNT) reached a high this weekend after Hugo Chavez cast further doubts as to whether the company's shareholders would be fairly compensated. The Venezuelan president announced in earlier this month that he would nationalize CANTV as well as the country's private power companies by the end of the year. While analysts believe that the country has sufficient funds to complete the $4 billion buyout, Chavez was quoted as saying: "So I don't want to hear stories about how I have to pay at such and such price, at the international price, no, no, no, CANTV was given away." Moreover, the government also noted that they would subtract monies owed to employee pensions from the final purchase amount. Combined, this news has caused CANTV stock to fall about 30% on the U.S. ADR market and 19% in the Venezuelan stock market, as investors continue to question just how much the country will pay.

Verizon Communications Inc. (NYSE:VZ) owns a controlling stake in the foreign company and stands to lose millions on its investment if Venezuela fails to properly value the company. This is further complicated by the fact that Chavez said his drive towards nationalization is intended to recover control of CANTV from U.S. interests and enhance service for neglected communities. In the end, it is unlikely that Verizon will be able to recoup the full value of its investment in CANTV and underscores the dangerous level of volatility involved with investing in emerging markets.

Swift Transportation Co., Inc. (NDAQ:SWFT) entered into a definitive merger agreement with an entity formed by Jerry Moyes, the company's largest shareholder, a current Director, and former Chairman of the Board and CEO of Swift, pursuant to which Mr. Moyes and certain of his family members will acquire Swift in an all-cash transaction valued at approximately $2.74 billion. This includes the assumption of approximately $332 million of net debt. Under the terms of the agreement, Swift stockholders will receive $31.55 in cash for each outstanding share of Swift common stock.

Simtek Corporation (NDAQ:SMTK) announced that total revenue for the year ended December 31, 2006, is expected to be approximately $30.6 million, up 194%, compared to revenues of $10.4 million in 2005; meanwhile, the current FY revenue consensus is $29.94 million.

Central Garden & Pet Company (NDAQ:CENT) announced preliminary results for its FY Q1 with a net loss of twelve to fourteen cents per fully diluted share on sales of approximately $320 million. This compares to the previous guidance of approximately breakeven for the quarter; the current consensus stands at $0.00 and $335.78 million.  

Pfizer (NYSE:PFE) plans to maximize revenues from its current in-line portfolio and new products. To expand future revenues, Pfizer will generate cost savings through site rationalization in research and manufacturing, streamlined organizational structures, staff function reductions, increased outsourcing and procurement savings. The company's cost reduction initiatives will result in the elimination of about 10,000 positions or about ten percent of Pfizer's total worldwide workforce by the end of next year. For 2007, Pfizer sees revenues comparable to 2006. The company is seeing an adjusted EPS of $2.18 to $2.25, up to $10B in common stock purchases. For 2008, Pfizer sees revenues comparable to 2006, with an adjusted EPS of $2.31 to $2.45.  

StarTek, Inc. (NYSE:SRT) said total revenues are expected to be approximately $238 million for FY06, versus the consensus $243 million. Q4 revenues are expected to be approximately $59 million, versus the consensus of $64 million. The company expects fully diluted earnings per share in the range of $0.07 to $0.09 per share for the Q4 2006, versus the consensus of $0.16 and $0.38 to $0.40 per share for the full year, versus the consensus of $0.47.

Texas Instruments (NYSE:TXN) reports Q4 EPS of $0.39, one cent better than estimates.  The company's revenues were $3.46 billion versus $3.43 billion consensus. They predict a Q1 EPS of $0.28 to $0.34, versus the consensus of $0.35, with a Q1 revenue of $3.01 to 3.28 billion versus the $3.30 billion consensus.

The board of directors of Gap Inc. (NYSE:GPS) and Paul Pressler announced today that they have mutually agreed that Mr. Pressler will step down from his position as president and CEO of the company, as well as resign his seat on the company's board, effective immediately. Robert J. Fisher, the company's current non-executive chairman of the board of directors, will also serve as president and CEO on an interim basis, effective immediately.

Carl Icahn discloses 6.73% stake in Temple-Inland Inc. (NYSE:TIN).  

ViroPharma Inc. (NDAQ:VPHM) will replace Per-Se Technologies Inc. (NDAQ:PSTI) in the S&P SmallCap 600 after the close of trading on Thursday, January 25. Per-Se is being acquired by S&P 500 constituent McKesson Corp. (NYSE:MCK) in a deal expected to close on or about that date, pending final approvals.

Agree Realty Corp. (NYSE:ADC) will replace CentraCore Properties Trust (NYSE:CPV) in the S&P REIT Composite after the close of trading on Wednesday, January 24. CentraCore is being acquired by The Geo Group, Inc. (NYSE:GEO) in a deal expected to close on or about that date, pending final approvals.

Strategic Hotels & Resorts, Inc. (NYSE:BEE) will replace Reckson Associates Realty Corp. (NYSE:RA) in the S&P REIT Composite after the close of trading on Thursday, January 25. Reckson is being acquired by S&P REIT Composite constituent SL Green Realty Corp. (NYSE:SLG) in a deal expected to close on or about that date, pending final approvals.

Nutrition 21, Inc. (NDAQ:NXXI) announced that daily supplementation with Selenomax, the company's high selenium yeast product, suppressed progression of the human immunodeficiency virus (HIV-1) and improved immune cell CD4 counts in HIV-1 seropositive men and women. These findings are significant because boosting the immune system's CD4 cell count and suppressing viral loads (co-measurements of HIV progression and the goals of HIV treatment), can decrease the likelihood of developing complication of HIV disease and prolong life. Selenomax will be available first at CVS/pharmacy (NYSE:CVS) in all its 6,200 retail stores across the country, including PharmaCare Specialty Pharmacy locations.  

Nitches, Inc. (NDAQ:NICH) reports Q1 EPS of $0.27 compared to $0.14 for the same period last year. Consolidated net sales for the Q1 FY07 increased 141% to $35.4 million versus $14.7 million for the first quarter of 2006.