Fair Isaac Corp.

FAIR ISAAC CORP. $22 (New York symbol FIC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 48.6 million; Market cap: $1.1 billion; WSSF Rating: Average) has dropped its lawsuit against credit bureau company Equifax. In 2006, Fair Isaac sued the three major U.S. credit bureaus (Equifax, Experian and TransUnion) for anti-trust violations. The three credit bureau companies teamed together to create VantageScore credit scoring software, which competed with Fair Isaac’s FICO scoring software. Fair Isaac is still suing Experian and TransUnion. As part of the settlement, Fair Isaac has formed a new partnership with Equifax. The partnership will combine Fair Isaac’s expertise in credit scoring software with Equifax’s consumer credit data to produce new credit analytics programs. Under this new partnership, Equifax will sell FICO 08, the latest version of Fair Isaac’s scoring software, to its customers in 2009....

MAJOR DRILLING, $53.25, symbol MDI on Toronto, reports that revenues rose 34.1% in the three months ended April 30, 2008, to $170 million from $129 million. Excluding one-time items, earnings rose 42.1%, to $25.3 million from $17.8 million. Earnings per share rose 39%, to $1.07 from $0.77 on more shares outstanding. Cash flow per share rose 38%, to $1.49 from $1.08. In the latest quarter, strong demand for drilling rigs, especially for gold projects, boosted revenues and earnings. About half of Major’s revenues come from gold drilling. South and Central American revenues rose 47%, to $60.4 million from $41.1 million, despite a slowdown in Ecuador and Venezuela late in the quarter. The strong Canadian dollar and labour shortages held back Major’s revenues and earnings, but the company was able to raise prices due to strong demand for its services. High prices of nickel, copper, gold, silver and other metals will continue to spur exploration activity. However, Major Drilling’s exposure to continued high resource sector activity adds risk. Its operations in Ecuador and Venezuela add political risk....

BIRCHCLIFF ENERGY, $12.82, symbol BIR on Toronto, rose over 15% this week after it reported that cash flow per share rose 33.3% in the three months ended March 31, 2008, to $0.28 from $0.21 a year earlier. Revenues rose 13.1%, to $56.2 million from $26.4 million. Excluding one-time items, the company earned $7.1 million or $0.07 a share, compared to a loss of $1.4 million or $0.02 a share. In the latest quarter, new production and rising oil and natural gas prices boosted both earnings and cash flow. Total daily production rose 62.5%, to 9,470 barrels of oil equivalent from 5,829 barrels. Average daily production from Birchcliff’s Worsley light oil wells more than tripled, to 2,827 barrels from 742 barrels. Average daily production at its Montney/Doig natural gas assets at Pouce Coupe rose 28.4%, to 37.8 million cubic feet from 29.4 million. Both Worsley and Montney/Doig are located in Alberta’s Peace River Arch region....

HEWLETT-PACKARD CO. $47.29, New York symbol HPQ, fell 10% this week after it agreed to buy Electronic Data Systems Corp. (New York symbol EDS), a provider of computer services to large government agencies and corporations. Major clients include the U.S. Navy and General Motors. Hewlett will pay $13.9 billion in cash for EDS. The company held cash of roughly $10 billion or $4.04 a share in cash at January 31, 2008, so it will have to borrow the money it needs to complete the takeover. However, long-term debt of $5.1 billion is just 5% of Hewlett’s market cap, so it can comfortably afford to take on more debt. The price is also less than half of Hewlett’s revenue of $28.3 billion in its second fiscal quarter ended April 30, 2008. That’s up 11.0% from $25.5 billion in the year-earlier quarter. Earnings per share before unusual items rose 24.3%, to $0.87 from $0.70....

FAIR ISAAC CORPORATION $25.25 (New York symbol FIC; SI Rating: Average) (415- 472-2211; www.fairisaac.com; Shares outstanding: 48.9 million; Market cap: $1.2 billion) is implementing a number of restructuring measures to boost profits. The company will sell more than a dozen non-strategic businesses. These include its government research, advertising and veterinary diagnostics businesses. Fair Isaac will also cut 420 jobs (out of 2,824 employees) and consolidate facilities. In total, Fair Isaac aims to reduce annual costs by about $100 million through the restructuring....

TOROMONT INDUSTRIES, $31.36, symbol TIH on Toronto, rose this week after it reported that revenues rose 2.6% in the three months ended March 31, 2008, to $400.6 million from $390.2 million a year earlier. That increase came despite a higher Canadian dollar, which reduced reported revenue by $47 million or 10%. Earnings per share rose 13.6%, to $0.25 from $0.22. The latest quarter include a gain realized on the sale of marketable securities. That added $0.03 to per-share earnings. In the latest quarter, equipment group revenues fell 11.5% on lower sales due to the strong Canadian dollar, adverse weather conditions and a strike in Newfoundland and Labrador. However, compression group revenues rose 23% due in part to continued strength in U.S. natural gas compression, and in North American industrial refrigeration....

FORD MOTOR CO. $8.27, New York symbol F, gained 10% this week after billionaire investor Kirk Kerkorian offered to buy up to 20 million common shares (1% of the total outstanding) at $8.50 a share. If successful, Kerkorian would own roughly 5.7% of Ford. The Ford family still controls about 40% of the company through special class B shares, so a full takeover seems unlikely. However, Kerkorian’s involvement is a plus, as it should put pressure on the company to continue to improve results. Meanwhile, Ford is starting to see some of the benefits of its latest restructuring. In the first quarter of 2008, the company earned $0.20 a share before unusual items, compared with a loss of $0.09 a year earlier. Revenue fell 8.4%, to $39.4 billion from $43.0 billion. If you exclude the recent sale of the Rover and Jaguar divisions, revenue would have grown slightly....

FAIR ISAAC CORP. $24.38, symbol FIC on New York, rose this week after it announced a number of restructuring measures. The company’s main business is its FICO software, which lets creditors use information about a customer to calculate a credit score. Fair Isaac will sell more than a dozen non-strategic businesses. These include its government research, advertising and veterinary diagnostics businesses, as well as some of its telecommunications applications. It has already sold its insurance-bill review business to Mitchell International. The company will also cut 420 jobs (out of 2,824 employees) and consolidate facilities. In total, Fair Isaac aims to reduce annual costs by about $100 million through the restructuring....

FAIR ISAAC CORP. $24.38, New York symbol FIC, has as its main business its FICO software, which lets creditors use information about a customer to calculate a credit score. The subprime mortgage crisis has hurt the banks and other financial institutions that are Fair Isaac’s major customers. These customers may cut back on software spending in the near term. However, over the longer term, the subprime crisis will likely increase demand for Fair Isaac’s reliable credit-scoring software. The company now hopes a new restructuring plan will improve its profitability. It plans to sell several non-core operations, cut staff and consolidate facilities. These moves should cut its annual pre-tax expenses by $35 million. To put that in context, Fair Isaac earned $20.2 million or $0.39 a share in the three months ended December 31, 2007....

FAIR ISAAC CORP. $22 (New York symbol FIC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 49.3 million; Market cap: $1.1 billion; WSSF Rating: Average) earned $0.39 a share in its first fiscal quarter ended December 31, 2007, down 25.0% from $0.52 a year earlier. Revenue fell 4.2%, to $199.4 million from $208.2 million. The subprime mortgage crisis has hurt the banks and other financial institutions that are Fair Isaac’s major customers. These customers may cut back on software spending in the near term. However, over the longer term, the subprime crisis will likely increase demand for Fair Isaac’s reliable credit-scoring software. Fair Isaac is a buy....