Updating Hewlett-Packard Co., Newell Rubbermaid Inc., Microsoft Corp., Adobe Systems Inc. and United Technologies Corp.

HEWLETT-PACKARD CO. $35 (New York symbol HPQ; Conservative Growth Portfolio, Manufacturing & Industry sector; WSSF Rating: Above average) is holding up well despite news that the company’s former chair used questionable surveillance techniques to identify a director who leaked certain information to the media. While embarrassing, we feel that the scandal will do little long-term damage to Hewlett’s business.

Hewlett-Packard is a buy.

NEWELL RUBBERMAID INC. $29 (New York symbol NWL; Income Portfolio, Consumer sector; WSSF Rating: Average) has agreed to sell its Little Tykes division, which makes children’s toys and furniture. The sale should generate a gain of between $15 million and $25 million; Newell earned $149.6 million or $0.54 a share before unusual items in its most recent quarter. The sale is part of Newell’s plan to sell less-profitable products, and focus on fastergrowing products such as office supplies.

Newell Rubbermaid is a buy.

MICROSOFT CORP. $27 (Nasdaq symbol MSFT; Aggressive Growth Portfolio, Manufacturing & Industry sector; WSSF Rating: Above average) plans to launch a new portable digital music player called “Zune”. Microsoft hopes this new product will take market share away from Apple’s iPod, and expand demand for its own media software and music download service. However, this is a crowded market. Like the Xbox video game machine, Zune will probably lose money for the first few years.

Microsoft is a hold.

ADOBE SYSTEMS INC. $38 (Nasdaq symbol ADBE; Aggressive Growth Portfolio, Manufacturing & Industry sector; WSSF Rating: Average) earned $0.16 a share in its third fiscal quarter ended September 1, 2006, down 44.8% from $0.29 a year earlier. However, Adobe only began expensing stock options in the current fiscal year. If you exclude these and other unusual costs, per-share profits were unchanged at $0.29. Revenue rose 23.7%, to $602.2 million from $487.0 million, mainly due to last year’s purchase of Macromedia Inc.

Adobe has gained 40% in the past two months, but is still below its post-merger peak of $41. Its high p/e of 45 also increases the risk of a sharp sell-off if earnings fail to meet expectations.

Adobe is a hold.

UNITED TECHNOLOGIES CORP. $63 (New York symbol UTX; Conservative Growth Portfolio, Manufacturing & Industry sector; WSSF Rating: Above average) plans to spend about $1 billion on acquisitions this year, down from an earlier forecast of $2 billion. Its annual revenues are roughly $45 billion. Consequently, the company raised its stock repurchase target, from $1.5 billion to $2 billion.

United Technologies is a buy.