Verizon Communications Inc.

GARMIN $32.48 (Nasdaq symbol GRMN; SI Rating: Speculative) (913-397-8200; www.garmin.com; Shares outstanding: 200.7 million; Market cap: $6.5 billion) faces an uncertain future because selling prices for its devices are falling and competition is increasing. Motorola and Verizon Wireless recently announced the first smartphone to feature Google’s Android 2.0 operating system for mobile devices. The new phone will allow users to access Google Maps Navigation, which provides turn-by-turn voice guidance as a free feature of Google Maps. The phone will also offer additional features, such as live traffic and business information, and Google Street View, which shows users photographs of the streets they look up. Garmin makes 80% of its sales from selling consumer products, like hand-held GPS receivers, portable navigation devices for cars, and fixed-mount GPS systems that are used in cars and boats. As the announcement from Verizon and Motorola shows, this market is increasingly threatened by rapidly evolving GPS applications in smartphones, including Apple’s iPhone, Palm’s Pre and others....

MOTOROLA INC., $8.57, New York symbol MOT, rose 5% this week after it reported better-than-expected earnings. The company also launched two new smartphones. In the three months ended October 3, 2009, Motorola earned $12 million, or $0.01 a share. If you exclude unusual items, it would have earned $0.02 a share. Analysts had expected the company to break even. In the year-earlier quarter, Motorola lost $397 million, or $0.18 a share. Among the unusual items the company recognized in the quarter were costs related to its plan to break itself into two publicly traded companies — the mobile-devices business, and the wireless-infrastructure and home-equipment operations. Motorola lowered its costs during the quarter, including an 8% cut in its workforce and the closure of some plants; these were the main reasons for the improved earnings. Motorola feels that these reductions will save it $1.9 billion in 2009. That’s up $100 million from its previous estimate....

GARMIN LTD., $30.26, symbol GRMN on Nasdaq, fell over 20% this week after Dutch-based rival TomTom reported that average selling prices for its devices were 8% lower than analysts were expecting in its latest quarter. Like TomTom, Garmin makes navigation devices that use the global positioning system (GPS). The company reports its results next week. Also this week, Motorola and Verizon Wireless announced the first smartphone to feature Google’s Android 2.0 operating system for mobile devices. The new phone will allow users to access Google Maps Navigation, which provides turn-by-turn voice guidance as a free feature of Google Maps. The phone will also offer additional features, such as live traffic and business information, and Google Street View, which shows users photographs of the streets they look up....

TEMPUR-PEDIC $21.15 (New York symbol TPX; SI Rating: Speculative)(800-878-8889; www.tempurpedic.com; Shares outstanding: 74.9 million; Market cap: $1.6 billion) makes and distributes Swedish mattresses and neck pillows made from its own Tempur material. The material conforms to the body to provide support and help alleviate pressure points. Tempur-Pedic sells its products in over 80 countries. In the quarter ended September 30, 2009, Tempur-Pedic’s earnings rose 6.7%, to $25.7 million, or $0.34 a share, from $24.1 million, or $0.32, a year earlier. The gain came despite an 11.4% drop in revenue, to $224.1 million from $252.8 million. Earnings benefited from improved efficiencies at its plants, and lower raw-material costs.

Debt down by half in under two years

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ALCOA INC., $14.24, New York symbol AA, rose 10% this week after it reported better-than-expected earnings and sales. In the three months ended September 30, 2009, the aluminum maker earned $73 million, down 76.1% from $306 million a year earlier. Earnings per-share fell 81.1%, to $0.07 from $0.37, on more shares outstanding. Alcoa has seen weaker aluminum demand from clients in the automotive, aerospace and construction industries. In response, the company has consolidated plants and laid off workers. These moves should lower Alcoa’s costs by a total of $2.4 billion a year. If you exclude restructuring costs and a gain related to its increased investment in an alumina-refining operation in Suriname, the company would have earned $0.04 a share in the latest quarter. On that basis, analysts were expecting Alcoa to lose $0.10 a share....

ATLANTIC TELE-NETWORK, $50.19, symbol ATNI on Nasdaq, has raised its quarterly dividend by 11.1%, to $0.20 a share from $0.18. The shares now yield 1.6%. This was the company’s eleventh consecutive annual dividend increase. In June, Atlantic agreed to buy more than 800,000 wireless accounts from Verizon Wireless for $200 million in cash. The subscribers are mostly in rural areas of Georgia, North Carolina, South Carolina, Illinois, Ohio and Idaho. The deal should close by the end of this year. These new accounts will bring Atlantic’s total number of wireless subscribers above one million, up from 200,000 today, and make it one of the largest wireless carriers in the U.S....

MOODY’S CORP., $18.85, New York symbol MCO, fell nearly 20% this week on new allegations that the company deliberately inflated its ratings on mortgage-backed securities and other complex investments. Bond issuers pay fees to rating agencies like Moody’s to rate their bonds. Some investors have sued the company, accusing it of knowingly issuing higher ratings so it didn’t risk losing these fees. Moody’s has denied the allegations. The stock also came under pressure after billionaire investor Warren Buffett lowered his stake in the company to 16.6% from 20.4% last July. As well, a court recently rejected a long-standing defence used by rating agencies that their opinions are protected under free-speech rights....

INVACARE CORP. $23 earned $0.30 a share in the second quarter of 2009, up 36.4% from $0.22 a year earlier. Much of the gain came from the company’s ongoing restructuring plan, which started in July 2005. Under the plan, Invacare is shifting production of wheelchairs, motorized scooters and other mobility and homecare products to low-cost countries and simplifying its product lines. Revenue fell 7.7%, to $412.5 million from $447.2 million, mostly due to unfavourable foreign-exchange rates. Buy. UNITED TECHNOLOGIES CORP. $63 still expects to earn about $4.08 a share this year, despite slow demand for its aerospace and construction-related products. As well, it expects its 2010 earnings to rise, mainly due to cost cuts. Buy. VERIZON COMMUNICATIONS INC. $30 has raised its quarterly dividend by 3.3%, to $0.475 a share from $0.46. The new annual rate of $1.90 yields 6.3%. Best Buy.

H&R BLOCK INC., $16.62, New York symbol HRB, lost $130.6 million in its first quarter, which ended July 31, 2009. That’s 1.7% higher than the $128.4 million it lost a year earlier. Earnings per share were unchanged, at $0.39. That’s a little worse than the $0.37-a-share loss that analysts were expecting. Revenue rose 1.3%, to $275.5 million from $271.9 million. H&R Block gets about 75% of its revenue from its tax-preparation business. As a result, it earns most of its money during its fourth quarter, which includes the April 15 income-tax-filing deadline. The company typically loses money in its first and second quarters....

INTERNATIONAL BUSINESS MACHINES CORP., $117.93, New York symbol IBM, announced this week that it will buy SPSS Inc. (Nasdaq symbol SPSS). Chicago-based SPSS makes software that analyzes sales and other data. This helps its clients predict how their customers will react to such things as price changes and new advertising campaigns. IBM will pay $1.2 billion for SPSS when the deal closes later this year. To put the purchase price in context, IBM earned $3.1 billion, or $2.32 a share, in the three months ended June 30, 2009. That’s up 12.2% from $2.8 billion, or $1.97 a share, a year earlier. Revenue fell 13.3%, to $23.25 billion from $26.8 billion. IBM gets 65% of its revenue from overseas markets, and the high U.S. dollar hurts the value of their contribution. However, IBM gets roughly 80% of its revenue from selling computer services and software. These generate higher profit margins than computer hardware. That’s why its earnings rose despite the lower revenue....