Zale Corporation (NYSE: ZLC) board members and management may be in for a shake up after former SEC chairman and activist investor Richard Breeden upped his stake in the company and announced his intent to make some changes at the jeweler. Many shareholders are hoping that the activist can help unlock value in a stock that has dropped from a high of $30 per share earlier this year to its current $14 per share.

“We believe that there are major opportunities for Zale to strengthen its profitability and its market value. We are excited to join with the board and the Zale management team in pursuing those opportunities with vigor and immediacy,” said Mr. Breeden in a statement.

Richard Breeden, who now owns more than 18% of Zale, also announced that he would take two seats on the board with a third one going towards an independent director. The move comes as Zale shares continue to fall after an ill-fated decision to convert Zale stores to upscale locations, which alienated many of its customers and suppliers.

Zale recently announced that it has approved several changes, including the sale of its high-end Baily Banks & Biddle stores and the closure of 60 underperforming stores in the next 90 days. Other believes that the company may be considering strategic alternatives such as a sale but it could be a far-fetched conclusion. Now, with Breeden’s involvement, these rumors have begun to surface yet again.

Overall, it remains unclear what Breeden’s plans for the company are, but we do know that he is an experienced activist investor that is more than capable of unlocking value in his investments. With an open management and board, along with two board seats, it will be interesting to see what actions he takes. Combined, these factors make ZLC a stock worth watching!

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Hewlett-Packard Company (NYSE: HPQ) shares are up marginally after Gartner and IDC released preliminary results for the fourth quarter showing HP and Dell Computers (NYSE: DELL) tied for the top market share. The computer manufacturer showed an overall growth of 14% with net revenues of $104.3 billion in fiscal 2007 with a large portion of its revenues coming from overseas. This has many investors and analysts believing that HP could be a recession-proof technology play.

HP has been very strong globally despite a slowing U.S. economy with 67% of its total revenues coming from outside the U.S. In the fourth quarter, the company saw Asia-Pacific revenues increase by 20%, EMEA by 19%, and Americas by 10%. Meanwhile, BRIC countries grew 37% year-over-year in the fourth quarter and accounted for 9% of total revenue.

The strongest revenues were seen in its personal systems group followed by its imaging and printing group and enterprise storage and services group. Meanwhile, the fastest growing group continues to be its software group, which saw growth of 74%; however, it only accounts for around 2% of total revenues. And HP’s service revenues came in second by growing around 12% to $2.3 billion.

CEO Mike Hurd is largely to credit for this huge turnaround for HP after cutting around 15,000 jobs and expanding into India and China. The strategy is expected to pay huge dividends this year as the U.S. economy is expected to grow just 1.9% versus 2.2% last year, according to the World Bank. Meanwhile, China is expecting to grow 10.8% and India is expected to grow around 8.4%.

Currently, HP’s stock is trading at around $44 per share with a market cap of around $112 billion. The drop in the stock is mostly due to macro-economic issues in the United States. This may be a great long-term buy-and-hold opportunity for value investors looking to take a position in a recession-proof company. In the end, HPQ is definitely a stock worth watching!

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Nintendo Co., Ltd’s (OTC: NTDOY) Wii consistently outperformed other major consoles in 2007 and is expected to do the same this year. The console-maker expects to sell more Wiis this year than it did in 2007 and has raised its production twice to 1.8 million units a month – still not enough to satisfy demand as they continue to sell out soon after hitting store shelves. Shareholders remain bullish on Nintendo stock, which has nearly doubled over the past year.

Video games remain the one bright spot in an otherwise rough retail sector. The success of Nintendo’s Wii along with Microsoft’s (NDAQ: MSFT) “Halo 3” title led to more video games being sold in 2007 than any other year, with sales hitting $17.94 billion. This number is up 43% from $12.53 billion in 2006. And December – the most disappointing month for traditional retail – saw sales up 28% year-over-year. It appears that video games sold well despite consumers cutting back on spending in other areas.

Nintendo’s most successful product last year was the Nintendo DS, which was the year’s best selling gaming system with over 8.5 million units sold. The Wii managed to sell 6.3 million units despite being in short supply all year. Interestingly, Nintendo has decided to hold the production on the Wii at 1.8 million units a month despite selling out nearly every run. Whether this is a good move or a bad one remains to b e seen.

Meanwhile, the two largest players in the industry continued to slide. Microsoft’s Xbox 360 sold only 4.6 million units in 2007 with the help of their blockbuster title “Halo 3”. Meanwhile, PlayStation lagged behind the rest by failing to break even a million sales despite its blockbuster franchise hit “Guitar Hero”. Sony recently announced a cheaper line of consoles in order to help them better compete in the market against the Xbox.

Overall, the video game industry appears to be immune to any slowdown in consumer spending. Right now, hardware sales are growing faster than software, but all companies in the sector are worth watching. Nintendo remains a pure-play that is experiencing the greatest success, so may definitely be worth a second look!

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