HSN, Inc. (NDAQ: HSNIV) complted its spin-off from IAC Interactive (NDAQ: IACI) today as a part of Barry Dillar's move to unlock value for shareholders. HSN is a leading multi-channel interactive retailer with some of the most dynamic brands and experiences in the retailing industry. As an independent company, investors are hoping that shares will be valued much higher than it was as a part of IACI. However, some experts aren't so sure that value will be unlocked...

Traditionally, spin-offs have outperformed the S&P 500 by a wide margin during their first three years as a public company. The reason is simply because parent company shareholders often have little appetite for the new spin-offs while they are also loaded with debt and have no fall-back. This combination of factors often lead to a sell-off during the first year that leaves room for enterprising investors to jump in and realize substantial gains as the stock returns to a fair value.

Chief Financial Officer Tom McInerney said in an interview that the value of the new companies should be much more than it is now and he hopes that it will be very obvious in a year. However, some analysts aren't so confident in additional value being unlocked. HSN was considered the division that was most undervalued, but analysts insist that HSN's problems are significantly worse than expected. Other businesses under the IACI umbrella are also continuing their decline early on.

In the end, these spin-offs may present opportunities to shareholders, but not in the obvious way. Many believe that the shares of these new companies, like HSNi, will fall substantially early on. Only after this initial fall will investors have a good entry point to get in and profit. The reason? Parent company shareholders will likely sell the new spin-offs while the performance of the companies continues to deteriorate in these tough markets.

Related Companies
ValueVision Media, Inc. (VVTV)
IAC Interactive (IACI)
Alloy, Inc. (ALOY)
Liberty Media Corporation (LINTA)
The Parent Company (KIDS)
BIDZ.com, Inc. (BIDZ)
Celebrate Express, Inc. (BDAY)
Overstock.com, Inc. (OSTK)
PC Mall, Inc. (MALL)
Liquidity Services, Inc. (LQDT)

Epicor Software Corporation (NDAQ: EPIC) may be in for a shake-up after an activist hedge fund unveiled a sizable stake in the software firm. Elliott Associates disclosed a 9.9% stake in the company and is inquiring about possible strategic alternatives in a Schedule 13D filing with the SEC. The hedge fund has been steadily purchasing shares since June, but acquired the majority of its stake during the past month. So, is this a stock investors should watch?

Activist hedge funds like Elliott Associates are known for pushing companies to pursue strategic alternatives to unlock value for shareholders. Strategic alternatives refer to efforts designed to sell all or parts of a company, spin-off business divisions, change the capital structure, or pursue a share buyback or special dividend. All of these efforts are designed to return immediate value to shareholders like Elliott Associates and YOU!

Epicor Software Corporation designs, develops, markets and supports enterprise application software solutions and services primarily for use by mid-sized companies and the divisions and subsidiaries of larger corporations worldwide. The company's products include back office applications for production management, supply chain management, retail management and financial accounting, as well as front office customer relationship management and service management.

Related Companies
Microsoft Corporation (MSFT)
Oracle Corporation (ORCL)
SAP AG (SAP)
QAD Inc. (QADI)
Salesforce.com, Inc. (CRM)
Lawson Software, Inc. (LWSN)
International Business Machines (IBM)
MICROS Systems, Inc. (MCRS)
Selectica, Inc. (SLTC)
NetSuite Inc. (N)

Pershing Square's William Ackman is well known on Wall Street for being an agitator for change. His controversial views on bond insurers made him billions on the short-side while a recent well-timed bet on Longs Drug Stores (NYSE: LDG) netting him several hundred million in mere weeks. Earlier this week, Pershing Square reported its most recent holdings in a Schedule 13F-HR filing with the SEC, which details each of its holdings.

Ackman's largest purchase was in Dr Pepper Snapple Group (NYSE: DPS) in which he acquired over 21 million shares at an average price of $24.70 per share. The activist investor also nearly doubled his stake in the troubled Wendy's (NYSE: WEN) restaurant chain at an average price of $27.10 per share. And finally, many investors are now well aware of Ackman's well-timed purchase of Longs Drug Stores at an average price of $43.50 just weeks before its acquisition by CVS was announced.

Ackman also reduced his holdings in Cadbury Plc and Target Corporation (NYSE: TGT), but still holds a total of nine stocks with a total value of $2.4 billion through his Pershing Square Capital Management hedge fund and has returned over 30% annually. The hedge fund currently holds, among other things, Barnes and Noble, Sears Holdings Corp, Borders Group, and a short position in MBIA Inc. Investors looking to piggy-back on this legendary investor may want to consider purchasing some of his recent holdings like Wendy's or Dr Pepper.

Related Companies
Good Times Restaurants Inc. (GTIM)
Jack in the Box Inc. (JBX)
Carrols Restaurant Group, Inc. (TAST)
Burger King Holdings, Inc. (BKC)
CKE Restaurants Inc. (CKR)
McDonald's Corporation (MCD)

The Security and Exchange Commission has used one tool to help investors find SEC filings since the 1980s. Its name was EDGAR and it was considered by many to be crude and difficult to use. The SEC announced on Tuesday that it would be introducing a new system, dubbed IDEA, to replace EDGAR as a tool to help investors find the information they need from regulatory filings.

IDEA will supplement EDGAR to start and eventually replace it altogether. SEC Chairman Christopher Cox said at a press conference that the new system will give investors faster and easier access to key financial information about public companies and mutual funds. Unlike EDGAR, IDEA will use data-tagging software to sort financial data.

“This is not just a new name for EDGAR, this is a fundamental change in the way the SEC collects, manages and distributes information,” Mr. Cox told a news conference on Tuesday. Mr. Cox has been well known for embracing new technologies in an attempt to update the SEC's databases and make them more accessible for investors.

The move comes after the SEC's push for public companies to begin reporting under the so-called extensible business reporting language, or XBRL, protocol. This protocol uses digital tags attached to each piece of financial data to allow investors to easily find and compare key figures. The largest public companies may be forced to file in XBRL in early 2009, according to the SEC.

IDEA will be provided free of charge to the public, like EDGAR, and is expected to be available starting later htis year. Meanwhile, the SEC said that EDAR filings will continue for the indefinite future.

Target Corporation (NYSE: TGT) shares fell despite announcing higher-than-expected second-quarter earnings. Earnings for the quarter came in at $0.82 per share on $15.47 billion in revenues, while its retail segment rose 5.7 percent. The catalyst behind the decline is likely the continued talk of a weak and soft sales environment. Moreover, investors were less than comforted with a drop in gross margins and a fall in the profitability of its credit card operations.

Target's net income fell on lower clothing and home goods sales as the government rebate checks begin to wane. The retailer fell behind Wal-Mart Stores (NYSE: WMT) once again as consumers continue to see bargains. Customers that are struggling with higher food and fuel prices, rising joblessness and the worse housing market since the Great Depression are quickly switching their spending from high-class Target stores to discount Wal-Mart stores.

Target may be a good bet over the long-term as the U.S. economy recovers, but until then, Wal-Mart may continue to be the smart bet on retailing. Wal-Mart, Costco, Sam's Club, and various dollar stores have all posted higher than expected sales as consumers rush to spend rebates at their stores. Meanwhile, Target and other higher class retailers are experiencing problems. Shares of Target dropped $0.22, or 0.44%, to $49.82 during today's trading session.

Related Companies
Wal-Mart Stores, Inc. (WMT)
PriceSmart Inc. (PSMT)
Costco Wholesale Corporation (COST)
Dollar Tree Inc. (DLTR)
Fred's Inc. (FRED)
Sears Holdings Corporation (SHLD)
99 Cents Only Stores (NDN)

Take-Two Interactive Software, Inc. (NDAQ: TTWO) shares dropped sharply after Electronic Arts Inc. (NDAQ: ERTS) dropped its $2 billion hostile bid and instead opted to pursue private talks with the company. Shares fell during today's trading on concerns that EA would walk away entirely or come back with a lower bid. However, on the upside, analysts now believe that a deal will be more probable with friendly talks in the works.

Many analysts believe that EA is going to take a second look at the buyout since Take-Two's blockbuster "Grand Theft Auto" game will come out before any takeover could take place. After all, the original purchase price was predicated on the distribution of that game during Christmas of this year. As a result, the new offering price, if it is negotiated, may be lower than many investors expect. Others insist that the game will add value to the Take-Two takeover.

Many experts believe that GTA IV has already been priced into Take-Two's stock price. The video game has already sold some 11 million units and pulled in revenues of $500 million in its first week. As a result, the company has increased its estimates for fiscal 2008 revenues from a range of $1.4 billion to $1.5 billion from $1.25 billion to $1.4 billion. Take-Two has refused to sell the company before its release, although some analysts now believe a takeover should be closer to $28 per share.

Related Companies
Activision Blizzard, INc. (ATVI)
Atari, Inc. (ATAR)
THQ Inc. (THQI)
Midway Games Inc. (MWY)
Majesco Entertainment Co. (COOL)
Navarre Corporation (NAVR)
Sony Corporation (SNE)

Timminco Limited (TSE: TIM) shares fell sharply earlier this week after the company reported lower-than-expected sales and made some questionable statements to investors. Short-seller Asensio has been making a bear case on the stock for some time, and it now appears like many of their predictions are coming true. Shares fell sharply after the news hit the market.

Timminco's 221 million tons of solar silicon shipped fell short of expectations due to contamination issues previously brought up by Asensio's research and denied by CEO Heinz Schimmelbusch in a May 30th article that appeared in the Globe and Mail. Earlier this week, the company elected to hold back 70 tonnes of silicon due to higher-than-expected phosphorous levels.

Asensio's issues with Timminco deals with its accounting for returns in sales recognition. A report on July 22nd issued by the short-seller questioned statements made by company officials that Timminco's customers were declining to return even highly contaminated parts of ingots for "extra credit offered by Timminco".

The big question going forward is whether or not the average selling price would decline due to returned material. CFO Rober Dietrich reiterated that there were no returns in the quarter, but did not shed any light on statements made by other executives mentioned above. As a result, Asensio believes there exists a possiblity of fraud within the high-flying company.

Related Companies
Graphit Kropfmuehl AG  (GKR)
RTI International Metals, Inc. (RTI)
Interural OAO (INUR)

The internet has become the new operating system with many companies moving many of their operations online. Microsoft Corporation (NYSE: MSFT) holds the monopoly on desktops and had the lead on web browsers until recently when competitor Firefox took a large share of the web browser market. So, how much is Firefox worth and should Google Inc. (NDAQ: GOOG) consider looking at Firefox?

How much does Firefox make? SpreadFirefox.com indicates that 622,003,431 people have downloaded the Firefox web browser with experts estimating that the firm makes $1 per download from the Google search box in the corner. The numbers suggest that the company is making between $100 million and $200 million per year in gross revenues with solid growth rates.

Additional revenues could be easily realized through other browser add-ons, default homepage ads, and other techniques. Since the Mozilla Foundation is more of a non-profit organization, revenue-generating activities have been kept relatively simple and limited in scope. Moreover, changes may alienate some users. Regardless, there is ample opportunity for increases.

Next, expenses must be considered. Mozilla's employee count is estimated at around 90 with more hiring planned in the future. Assuming that the firm has 100 full-time employees at $100,000 per employee, plus $50 million a year in other equipment/service costs, total expenses are around $60 million per year. This pegs the annual gross profits at around $40 million to $140 million.

Public companies also face additional costs that must be included in the net profit calculation. Sarbanes Oxley compliance costs around $5 million a year with taxes taking out an additional chunk of change. This would leave the firm with around $40 to $90 million in net income after all is said and done.

Investors know that public companies all trade at earnings multiples based on growth rates. Given the market growth, investors could expect a minimum price-to-earnings ratio of 25x earnings, which implies a valuation of around $1 billion to $2.2 billion. This is relatively conservative given the recent valuation of Facebook by Microsoft and acquisitions by Google.

Of course, Mozilla has repeatedly insisted that it would not go public. However, growing pressure on Google to find new revenue growth streams may force them to take a look at the company (Microsoft wouldn't have a chance) while the increasing valuations may be too much for some to resist.

Related Companies
Google Inc. (GOOG)
Microsoft Corporation (MSFT)
Yahoo Inc. (YHOO)

Deere & Company (NYSE: DE) shares continued their declines after it announced disappointing results in the third-quarter. Sales managed to grow an impressive 18% year-over-year - helped by a 35% growth in agricultural equipment - to $7.07. However, the most wasn't enough to impress Wall Street analysts that were expecting $7.23 billion. Operating margins also decreased a full percentage point to 13.2%, which is always a bad sign despite higher revenues.

The big concern surrounding Deere & Company its costs would increase and put pressure on its margins. Agricultural commodity prices have moderated and put some pressure on revenues, but the real problem is the cost of raw materials. The company's financial services operations also saw operating profits fall 21 percent to $111 million because of higher expenses, an increase in leverage, and a higher provision for credit losses.

Deere & Company, through its subsidiaries, operates in four business segments. The agricultural equipment segment manufactures and distributes a line of farm equipment and related service parts, including tractors; combine, cotton and sugarcane harvesters; tillage, seeding and soil preparation machinery; sprayers; hay and forage equipment; integrated agricultural management systems technology, and precision agricultural irrigation equipment.

Related Companies
AGCO Corporation (AG)
Gehl Company (GEHL)
Alamo Group, Inc. (ALG)
Caterpillar Inc. (CAT)
Lindsay Corporation (LNN)

LDK Solar Co., Ltd. (NYSE: LDK) shares surged higher after the solar-maker reported better-than-expected second-quarter results in a 6-K filing with the SEC. Revenues surged 89.2% to $441.7 million after total wafer shipments increased 60.8% during the quarter. Meanwhile, gross profit margins ended up at 25.4%, meaning it didn't sacrifice profits for revenues. LDK Solar also upwardly revised its outlook for the year as it retains a bullish sentiment on the industry.

"We experienced substantial revenue growth during the second quarter as our wafer capacity expansion exceeded our expectations," stated Xiaofeng Peng, Chairman and CEO of LDK Solar. "We are pleased with our continued success of executing our growth strategies. In addition to our wafer capacity expansion, tremendous progress has been made to date on the construction of our polysilicon plants and the project remains on schedule."

The Chinese solar maker now expects revenues between $486 million and $496 million on shipments of between 210 megawatts and 220 megawatts of wafers in the third quarter. The company also lifted its full year guidance to between $1.65 and $1.75 billion compared to between $1.08 and $1.18 billion earlier. Meanwhile, analysts expected only $1.16 billion, which is why we saw the dramatic jump in today's trading when shares soared more than 26% briefly.

Despite the dramatic move, LDK Solar remains well below its 52-week highs of $76.75 per share. This is because the primary driver downwards was a reduction in growth estimates for the industry, which forced down PE multiples. Currently, LDK Solar trades at just 26x earnings, which is far below its prior valuations of closer to 50x earnings. This mirrors much of the rest of the industry that has also seen multiple contraction.

In the end, if solar companies like LDK Solar can continue to outperform like they have yesterday, we may see an increase in the multiples that could justify a higher share price on two levels. Earnings per share will be greater and the multiple will grow larger. However, if the rest of the industry shows signs of weakness, then investors have have to count on only one part of this equation to profit.

Related Companies
Canadian Solar Inc. (CSIQ)
ReneSola Ltd. (SOL)
Trina Solar Limited (TSL)
China Sunergy Co. (CSUN)
JA Solar Holdings (JASO)
Evergreen Solar Inc. (ESLR)