New Medicare Rules Boost J&J, Others

GM has wider second quarter loss than first announced; P&G, Mittal Steel, Time Warner and more post quarterly results; plus more stocks in the news Wednesday

From Standard & Poor's Equity Research

Medicare released new rules governing reimbursement to hospitals for certain medical devices. S&P sees the new rules aiding makers of implantable cardioverter defibrillators and cardiac stents, including Johnson & Johnson (JNJ) and St. Jude Medical (STJ).

Rambus (RMBS) shares fell Wednesday after the Federal Trade Commission said the company unlawfully monopolized markets for four computer memory technologies for dynamic random access memory, or DRAM, chips. The company was to hold a conference call Wednesday to discuss the FTC decision.

CheckFree (CKFR) shares fell Wednesday after the company posted lower-than-expected 39 cents vs. 39 cents fourth quarter underlying EPS on a 12% revenue rise. The company sees first quarter GAAP EPS of 29 to 31 cents, and full year fiscal 2007 EPS of $1.58-1.62. S&P keeps buy, but slashes target. CIBC World cut its estimate.

General Motors (GM) revises its previously reported second quarter loss of $5.62 to a loss of $5.97. Results are due to a change in an estimated tax provision relating to the expected loss on the pending sale of its 51% interest in GMAC. Previously announced adjusted earnings per share (EPS) is not affected.

Procter & Gamble (PG) posts 55 cents vs. 52 cents fourth quarter EPS on a 25% sales rise (including the addition of Gillette.) It sees 5% to 7% first quarter fiscal year 2007 organic sales growth, and 76 cents to 78 cents EPS. It also sees 4% to 6% fiscal year 2007 organic sales growth and $2.96 to $3.00 EPS.

Mittal Steel (MT) posts $1.015 billion vs. $1.090 billion second quarter net income despite a 21% sales rise. It notes results were better than expected, while operating income was up 49% sequentially. It expects market conditions to continue to improve, and further growth in third quarter operating income.

Time Warner (TWX) posts 20 cents second quarter EPS vs. 9 cents loss (including certain items) on a 1% revenue rise. It sees low double-digit 2006 growth in adjusted EBITDA, including the low single-digits for newly acquired Adelphia.

Computer Sciences Corp. (CSC) posts 61 cents vs. 58 cents first quarter EPS from continuing operations despite slightly lower revenue. It raises fiscal year 2007 EPS guidance to between $3.71 and $3.81, including options.

Mastercard (MA) posts better-than-expected 74 cents (excluding special items) vs. 89 cents second quarter EPS despite a 9.7% revenue rise.

Adobe Systems (ADBE) believes third quarter results will fall within target ranges it provided on June 15: revenue of $580 million to $610 million, GAAP EPS of 13 cents to 16 cents, and non-GAAP EPS of 25 cents to 27 cents.

Electronic Arts (ERTS) posts 12 cents first quarter loss vs. 18 cents first quarter non-GAAP loss on a 13% revenue rise. It sees fiscal year 2007 non-GAAP EPS of 35 cents to 65 cents on revenue of $2.8 billion to $3 billion.

Moody's (MCO) posts 59 cents vs. 47 cents second quarter EPS on a 14% revenue rise.

Southwest Airlines (LUV) reports a 6.2% rise in July revenue passenger miles (RPMs) and a 7.9% rise in available seat miles (ASMs).

Automatic Data Processing (ADP) posts 42 cents vs. 37 cents fourth quarter EPS (including stock option expense) on a 14% revenue rise. It plans to spin-off its Brokerage Service Group business. It also sees 10% fiscal year 2007 revenue growth and 17% to 20% EPS (excluding any expenses for spin-off.) It also sets a 50 million share buyback.

Cigna (CI) posts $2.31 vs. $1.98 second quarter adjusted operating EPS despite a slight drop in revenue. It sees $2.00 to $2.25 third quarter adjusted operating EPS and $8.30 to $8.80 in 2006.

Alcan (AL) posts $1.20 vs. 52 cents second quarter EPS on a 17% revenue rise. It raises its quarterly dividend 33%. It also sees 2006 world primary aluminum consumption increasing about 6.8%.

Davita (DVA) posts 60 cents vs. 51 cents second quarter EPS on a 96% revenue rise. It revises $600 million to $680 million 2006 operating income guidance to between $670 million to $700 million.

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