Cost-U-Less Inc. (NDAQ:CULS) shares continued their rise today after Delafield Hambrecht demanded that the company immediately put itself up for sale in a letter attached to their Schedule 13D filing with the SEC. These demands come after Monarch Activist Partners - a 5.4% holder in the company - made similar demands for the company to put itself up for sale in order to deliver value back to shareholders.  They both argue that the company would be better off being private as it is incurring heavy costs associated with being a public company while failing to realize the benefits with an illiquid, under-performing stock.

Just how much is Cost-U-Less actually worth in their eyes? Well, Delafield Hambretch reasons that given the company's current enterprise value of $30 million, and using EBITDA estimates of $7 million for 2006 and $7.5 million for 2007, pro-forma EBITDA for a prospective buyer should be $8.5 million (after adding back public company expenses). If this assumption is correct, then the company currently trades at only 3.5x EBITDA. What does all of this mean? Well, Monarch Activist Partners noted that Pricesmart (the company's self-acknowledged closest competitor) trades at a multiple of almost 16x. This means that even after taking an extremely conservative approach and valuing the company with a 40% discount from the industry mean, CULS is worth in excess of $12 per share. This translates into a 40% or greater premium to today's stock price!

Delafield Hambrecht also indicated that while a strategic buyer would likely pay more for the company, financial buyers would still pay a significant premium to the current market rates. On that note, the hedge fund said that it would likely participate as such a bidder if the company were put up for sale. Many investors also insist that there could be other strategic buyers, given the company's low market cap and deep discount to its peers.

But will any of this materialize? Well, given the nearly 15% combined stake in company by these two hedge funds, management may decide to respond to shareholders rather than risk a confrontation with the two hedge funds. Indeed, both hedge funds said that if they did not hear back from management, they may seek to replace members of the board in a proxy contest, which should set off some alarms at company headquarters. Unfortunately, the company's Investor Relations personnel were unavailable for comment today when we called; however, we will follow-up and post any developments here at SECInvestor.com. Meanwhile, this is definitely a stock to keep a close eye on as this situation unfolds, especially given the deep discount in the company's share price.

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Equity Office Properties Trust (NYSE:EOP) shares moved up $1.67, or 3.16%, to $54.36 today after the Blackstone Group raised their bid by 11%, from $48.50 per share to $54 per share. This new bid is now that highest on the table after a consortium of investors led by REIT Vornado Realty Trust (NYSE:VNO) had the previous high bid of $52 per share. The board of trustees continues to recommend the Blackstone deal and will hold a special shareholder meeting scheduled for February 5th to vote on the merger agreement. The company said it can close the Blackstone deal on or about Feb. 8.

Equity Office also noted that Blackstone's termination fee has been raised to $500 million from $200 million; however, the company said it would continue to provide diligence information to the Vornado group so that it can submit a definitive counteroffer, if it desires, by January 31st for consideration. The company was also quick to point out that the $500 million termination fee represented just 2.1% of the offer, and therefore would not significantly discourage any future bids for the company. Meanwhile, shareholders remain cautiously optimistic as shares of EOP current trade at $54.36 - above the $54 high offer. The final price of this highly irregular bidding war remains to be seen; however, this is definitely a stock to keep an eye on over the next couple of weeks.

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eBay Inc. (NDAQ:EBAY) share rose $3.20, or 10.67%, to $33.12 today after the company surprised investors with a strong finish to a mixed year. The company's 8-K filing with the SEC revealed record net revenues of $1.7 billion with a net income of $346 million, or $0.24 per share. eBay also announced that it had repurchased $1 billion worth of stock and planned to expand its program to an additional $2 billion.

Meg Whitman, President and CEO of eBay, commented, "Q4 was an excellent quarter for eBay, bringing 2006 to a very good close. All three of the company’s business units delivered impressive results this quarter, including record net revenues from our Marketplaces business, strong total payment volume on PayPal, and a triple-digit increase in the number of Skype users." Specifically, eBay saw a 24% growth in net revenues from its Marketplaces business, a 57% increase in total payment volume for its PayPal segment, and a 129% increase in the number of Skype users.

Meanwhile, Bob Swam, Chief Financial Officer, stated, "Overall, Q4 was a great quarter, with strong results across all of our businesses. The $1 billion share repurchase we executed this quarter, in addition to expanding the program for another $2 billion, further underscores our confidence in the long-term outlook of the business." These share repurchases will continue to increase the company's earnings per share, as it now expects to make between $0.28 to $0.30 for Q1 2007 and $1.25 to $1.29 for FY2007. Combined, these aspects make eBay a stock worth taking a look at over the next few months.

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Bristol-Myers Squibb Co. (NYSE:BMY) reported Q4 EPS of $0.19, three cents better than estimate. The company foresees a FY07 EPS of $1.20-$1.30, versus the consensus of $1.22.

Baxter International Inc. (NYSE:BAX) reported a Q4 EPS of $0.66, five cents better than estimates. Revenues were $2.8 billion versus the $2.72 billion consensus. For the first quarter 2007, the company expects organic sales to grow five to six percent, and earnings of $0.54 to $0.56 per diluted share. The current consensus is $0.53. The company expects earnings for full-year 2007 to be $2.47 to $2.53 per diluted share versus the consensus of $2.48.

Lockheed Martin (NYSE:LMT) reported Q4 earnings of $1.64 per share, eighteen cents better than the consensus. Revenues came in at $10.84 billion versus the consensus of $10.77 billion. The company predicts a FY07 EPS of $5.80-$6.00, versus prior guidance of $5.60-$5.80, with the consensus at $5.87.

AT&T Inc. (NYSE:T) reported a Q4 EPS of $0.61, two cents better than estimates. Revenues came in at $15.9 billion. The outlook was reaffirmed for continued double-digit adjusted earnings per share growth with growing free cash flow after dividends in 2007 and 2008; expected BellSouth merger synergies revised upward, estimated net present value increased from approximately $18 billion to approximately $22 billion.

Quest Diagnostics (NYSE:DGX) reported a Q4 EPS of $0.77, three cents better than estimates. Revenues were $1.5 billion versus the $1.57 billion consensus. For the full year 2007, the company expects results from continuing operations as follows: earnings per diluted share of between $2.70 and $3.00; and revenues of $6 billion to $6.2 billion. The current FY07 EPS consensus is $3.21 and the revenue consensus is $6.41 billion.

Lear (NYSE:LEA) reported a Q4 loss of $8.90 per share, which does not compare to the consensus of a $0.19 loss. Revenues came in at $4.28 billion versus the consensus of $4.14 billion. The company foresees FY07 revenues to be $15 billion versus the consensus of $16.3 billion.

SunPower Corporation (NDAQ:SPWR) reported a Q4 EPS of $0.18, one cent better than estimates. Revenues came in higher at $74.5 million versus the consensus of $71.85 million. The company predicts a Q1 EPS of $0.18-$0.20, and Q1 revenues to be $125 to $135 million.  The guidance for the FY07 EPS is $0.90-$1.00 and FY07 revenues to be $640 to $670 million.

Nucor Corporation (NYSE:NUE) reported a Q4 EPS of $1.35 versus the consensus of $1.13. Revenues were $3.47 billion versus the $3.34 billion consensus.

Midwest Air Group, Inc. (AMEX:MEH) reported a Q4 EPS of $0.16, five cents better than estimates. Revenues were $168.3 million versus the $168.35 million consensus. For the full year of 2007, Midwest is projecting non-GAAP net earnings per diluted share to be in excess of $1.70. The current consensus is $0.89. Midwest is also projecting that 2007 revenues will exceed $825 million, with the current consensus of $746.6 million.

Brunswick Corporation (NYSE:BC) reported a Q4 EPS of $0.47 versus the consensus of $0.38. Revenues were $1.37 billion versus the $1.35 billion consensus. For 2007, the company is estimating earnings to be lower, in the range of $1.65 to $2.00 per share, with the current consensus at $2.11.  

McKesson (NYSE:MCK) reported a Q3 EPS of $0.79, eleven cents better than estimates. The company foresees the FY07 EPS to be between $2.75-2.85 versus the $2.74 consensus.

MEMC Electronic (NYSE:WFR) reported a Q4 EPS of $0.68, nine cents better than estimates. Revenues were $420.5 million versus the $416.09 million consensus. The company predicts FY revenues of $1.9 billion and an EPS over $3.00 per share. The FY revenue consensus is $1.84 billion and the EPS consensus is $2.55.

Microsoft (NDAQ:MSFT) reported a Q2 EPS of $0.26, three cents better than estimates. Revenues were $12.54 billion versus the $12.08 billion consensus.

Callidus Software (NDAQ:CALD) reported a Q4 EPS of $0.00, five cents better than estimates. Revenues were $24.1 million versus the $20.4 million consensus. The company predicts Q1 revenues between $20.5 and $22 million, versus the $18.2 million consensus.

Synaptics (NDAQ:SYNA) reported a Q2 EPS of $0.32, three cents below the consensus of $0.35. Revenues were $76.1 million versus the $71.22 million consensus. The company foresees Q3 revenues between $58 and $61 million versus the $55 million consensus.

Columbia Sportswear (NDAQ:COLM) reported a Q4 EPS of $1.06, eight cents better than estimates. Revenues were $361.8 million versus the $357.20 million consensus.

New York Times Company (NYSE:NYT) shares fell $0.37, or 1.55%, to $23.47 today after Morgan Stanley indicated their disappointment with the company's decision to retain their dual-class voting structure. Morgan Stanley's Schedule 13D filing with the SEC noted that "by excluding the proposal from the proxy, the company has left the Class A shareholders with limited avenues for expressing their dissatisfaction with the poor performance of the managers of their business." Investor concerns about this dual-class voting structure are not new; in fact, during last year's annual meeting 30% of the company's Class A votes were withheld in protest.

Why is this such a major concern? Well, Morgan Stanley insisted in its letter that many independent analysts believe NYT is worth 50% more than the current stock price suggests; moreover, they contend that the difference between the company's intrinsic value and share price is due to mismanagement and poor governance. As a result, Morgan Stanley said that after patiently holding the stock for more than ten years, they don't think that they would be best serving their clients interests if they sold their stake at such a substantial discount to fair value. The fund said that if the company failed to act they may consider withholding their votes in future annual meets in protest. If shareholders succeed in eventually correcting the mismanagement, it could mean significant share appreciation for NYT investors. This makes NYT a company worth watching over the next few months.

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Electro Scientific Industries, Inc. (NDAQ:ESIO) shares rose $0.45, or 2.19%, to $21.02 today after 11.6% holder Nierenberg Investment Management filed a Schedule 13D/A with the SEC that commented on Third Avenue Management's recent proposals along with the company's current actions. The hedge fund said that it was pleased with management's willingness to act on the proposals and was impressed by TAM's suggestion of a combined share repurchase and dividend program. Nierenberg also noted the fact that United Microelectronics Corp. (UMC) recently said that it would use its excess cash to retire 30% of its outstanding shares and pay shareholders a one-time cash dividend - actions similar to those proposed by the two hedge funds.

Nierenberg also offered an extension to TAM's plans:

"As Mr. Jensen's letter points out so powerfully, there are other perfectly acceptable ways to use excess cash to build shareholder value. If, for example, ESIO's Board and advisors were to conclude that the best way to improve ROE were to repurchase shares, we could support that decision with just two conditions. First, we would want the size of the repurchase program to be large enough that it would meaningfully boost both ROE and earnings per share, like we believe UMC's program will. And, second, we would like ESIO to make a continuing commitment to use excess cash flow to repurchase a significant percentage of shares on an ongoing basis. To illustrate the size of programs which could be acceptable to us, we could support a one time repurchase of six million shares, which is over 20% of the outstanding share count, succeeded by a continuing program to repurchase at least one million more shares annually."

Clearly, there are many ways in which the company could utilize its excess cash to benefit shareholders. The most important thing to watch, as Nierenberg pointed out, is the scale on which repurchases or dividends are handled. Many times companies will try and silence concerned shareholders by initiating insignificant share buybacks or small cash dividends, which ultimately do very little to deliver shareholder value. A program like UMC's, however, would significantly reduce the number of outstanding shares and consequently boost the company's EPS significantly. Moreover, the cash dividend would rid the company of its idle cash, which can actually be dangerous to have in some cases. Overall, this is definitely a stock to watch as management works to craft a meaningful response to these proposals.

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Altria Group, Inc. (NYSE:MO) shares rose $0.26, or 0.3%, to $88.02 in early morning trading after Merrill Lynch raised its price target from $92 to $98. This follows several other analyst recommendations, including Goldman Sachs who recommended buying the stock before the details of its Kraft spin-off are announced on January 31st. These analysts believe that Kraft spin-off combined with an improving international tobacco market will help propel the stock to new highs now that the company has cleared its legal plate.

But why is this such a great deal for shareholders? Well, the Kraft spin-off is expected to generate approximately $34 billion in cash, which the company could use to buyback a quarter of its outstanding shares, raise its dividends, or use to expand into international markets. Secondly, Altria shareholders will automatically receive shares in Kraft (NYSE:KFT), which have performed exceptionally well in 2006 moving up 22%. Finally, we know that Altria has always been a robust company; even in the face of several mega-lawsuits, the company has still managed to almost triple in value since 2000 while also paying a nice dividend. Combined, these factors make MO a stock worth keeping a close eye, especially on January 31st when the details of the spin-off are released.

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Air Products (NYSE:APD) reported Q4 EPS of $1.03, ten cents better than estimates. Revenues were $2.43 billion versus the consensus of $2.29 billion. The company currently anticipates fiscal Q2 EPS in the range of $.98 to $1.03 per share. The current consensus is $0.98.  

Corning Incorporated (NYSE:GLW) reported Q4 EPS of $0.31 Revenues were $1.37 billion versus $1.30 billion consensus. Corning said that it expects Q1 sales to be in the range of $1.26 billion to $1.31 billion and earnings per share in the range of $0.24 to $0.27. The current Q1 revenue consensus is $1.34 billion and EPS consensus is $0.28.  

AmerisourceBergen (NYSE:ABC) reported Q1 earnings of $0.65 per share, nine cents better than the estimates. Revenues came in at $15.7 billion. The company foresees FY07 EPS of $2.45-$2.60 versus prior guidance of $2.40-$2.55 and the consensus of $2.50.

Bank of America (NYSE:BAC) announced a 200 million share buyback.

Energen Corporation (NYSE:EGN) reported Q4 EPS of $1.31 versus the consensus of $0.72. Revenues were $380.8 million versus $326.68 million consensus. Energen reaffirmed its 2007 earnings guidance range of $3.80 to $4.20 per diluted share. The current FY07 EPS consensus is $3.94. 

Novellus (NDAQ:NVLS) reported Q4 EPS of $0.63, eight cents better than estimates. Revenues were $438.5 million versus $436.44 million consensus.

Symantec (NDAQ:SYMC) reported Q3 EPS of $0.26, one cent better than estimates. Revenues were $1.324 billion versus the $1.31 billion consensus. The company predicts Q4 Non-GAAP revenues of $1.25-$1.28 billion versus the consensus of $1.27 billion, with an EPS OF $0.18-$0.20 versus the consensus of $0.21. The company has also announced a $1 billion stock buyback plan.  

Ariba (NDAQ:ARBA) reported Q1 EPS of $0.13, four cents better than estimates. Revenues were $77.2 million versus the $75.92 million consensus.

eBay (NDAQ:EBAY) reported Q4 EPS of $0.31, three cents better than estimates. Revenues were $1.72 billion versus the $1.67 billion consensus. The company predicts a FY07 EPS of $1.25-$1.29 versus the consensus of $1.23.  

Textron (NYSE:TXT) reported Q4 EPS of $1.54, eight cents better than estimates. Revenues were $3.2 billion versus $3.10 billion consensus. The Q1 EPS  is below guidance with $1.15-$1.25 versus the consensus of $1.36 . The company foresees a FY07 EPS of $5.90-$6.10 versus the consensus of $6.28.

Intersil (NDAQ:ISIL) reported Q1 EPS of $0.34, two cents better than estimates. Revenues were $181.1 million versus the $185.02 million consensus. The company sees the guidance for Q1 EPS of $0.27-$0.29 versus the consensus of $0.30, with Q1 revenues of $162-$168 million versus the consensus of $183.2 million.

Varian Inc (NDAQ:VARI) reported Q1 EPS of $0.61, thirteen cents better than estimates. Revenues were $217.9 million versus $207.94 million consensus. Also, the company announced a $100 million buyback.

Polycom (NDAQ:PLCM) reported Q4 EPS of $0.36, six cents better than estimates. Revenues were $186.5 million versus $180.56 million consensus.

Bottomline Technologies (NDAQ:EPAY) reported Q1 EPS of $0.10, eight cents better than estimates. Revenues were $29.7 million versus the $27.16 million consensus.

Plexus (NDAQ:PLXS) reported Q4 EPS of $0.32, one cent worse than estimates. Revenues were $381 million versus $390.40 million consensus. The company foresees a Q2 EPS of $0.15-$0.19, versus the consensus of $0.35, with Q2 revenues of $345-$355 million versus the consensus of $403.14 million.

Semitool (NDAQ:SMTL) reported Q1 EPS of $0.18, six cents better than estimates.  Revenues were $68 million versus the $65.23 million consensus, while predicting a Q2 EPS of $0.02-$0.04 versus the consensus of $0.18. Q2 revs are to be $55-$57 million versus the consensus of $70.83 million.

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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