wall street

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....

My guess is that we are now closer to the end of a market downturn than the start of one. However, you need to distinguish between the two main kinds of market downturn. One is the stereotypical bear market – the kind of long-term decline that drags on for a year or more and is generally accompanied by a painful recession and a deep fall in stock prices. Our last bear market took place from mid-2000 through the last quarter of 2002, after the Internet boom of the late 1990s went bust. In that period, the Toronto index fell from 11,300 to 5,800. The other type of downturn, the so-called correction, may also be accompanied by a recession, and can also do a lot of damage to stock prices. However, a correction generally ends in less than a year, sometimes a lot less....

I’d choose ‘Buy’ Many members of my Inner Circle have asked the same question this week: Is it time to buy? If I had to choose between “Buy” and “Sell”, I’m going to say “Buy”, by a big margin....

Hexagon AB’s $50 U.S. bid for NovAtel gives us a gain of 2986.4% since we first recommended the stock in June, 2001. It’s what successful investors might call a ’28-bagger’. That beats our other recent successes such as Aur Resources (a 12-bagger) and Home Capital (a 10-bagger). However, it doesn’t quite measure up to Janna Systems, a software stock we recommended in November, 1998. In January 2001, we advised selling Janna for a 4,111.0% gain. Readers often ask how we come up with winners like these, while generally avoiding the total wipe-outs that plague most aggressive- stock advisors....

NCR CORP. $49.77, New York symbol NCR, has fixed the terms of its planned spin-off of subsidiary Teradata Corp. NCR stockholders will receive a special dividend of one Teradata common share for each NCR share they own. The dividend is a tax-free distribution. NCR stockholders will only have to pay capital gains taxes on Teradata when they sell the stock. Teradata will trade on New York, symbol TDC. The stock will begin trading on a “when issued” basis on September 14. Regular trading begins October 1. Teradata makes computers and software that capture and store large quantities of a business’s data, such as its sales and inventory. Analyzing this data to identify buying habits and trends helps Teradata clients make better decisions and expand profits....

TORSTAR CORP. $22 (Toronto symbol TS.B; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 78.5 million; Market cap: $1.7 billion; SI Rating: Above average) earned $0.20 a share (total $15.7 million) in the first quarter of 2007, nearly triple the $0.07 a share (total $5.9 million) it earned a year-earlier. However, the year-earlier earnings did include a $3.7 million (pre-tax) restructuring charge. Revenue rose 5.7%, to $377.4 million from $357.1 million. Most of the gains come from Torstar’s community newspaper division and Internet sites, which offset flat growth at its flagship newspaper, The Toronto Star. The company now plans to redesign The Toronto Star, including narrowing its size. That should save it $4 million a year. The stock moved up after Fairfax Financial Holdings Inc. acquired about 18% of Torstar’s non-voting ‘B’ shares. A takeover offer for Dow Jones, owner of The Wall Street Journal, has also helped draw attention to the value of strong newspaper brands....

DOW JONES & CO. INC. $55.80, New York symbol DJ, jumped 55% after News Corp. offered to buy the company for $60.00 a share, probably in some combination of cash and News Corp. stock. News Corp. owns several media properties, including Fox Broadcasting and the New York Post. It feels The Wall Street Journal and other Dow Jones publications and web sites will strengthen the new business-news cable channel it plans to launch later this year. The Bancroft family owns 82.4% of Dow Jones’ class B shares, which carry 10 votes each. This plus their regular common stock holdings gives them 64.2% of the total votes. Right now, roughly half of the family’s members oppose the News Corp. offer. However, a formal rejection could trigger a lawsuit accusing the company’s directors of breaching their fiduciary duty to act in the best interests of all stockholders....

DOW JONES & CO. INC. $34 (New York symbol DJ; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 83.8 million; Market cap: $2.8 billion; WSSF Rating: Above average) publishes The Wall Street Journal, which is the second most widely read newspaper in the United States. It also publishes Barron’s magazine, and over 20 smaller newspapers. Dow Jones recently redesigned The Wall Street Journal to make it easier to read, and added more general interest features to expand its appeal beyond its traditional readership and advertisers. The company also shrank the width of the paper, which cuts its newsprint and delivery costs by roughly $18 million a year. Other cost cutting initiatives will save it $46 million a year. Thanks to these moves, earnings before restructuring costs and other unusual items rose 13.3% in 2006, to $1.11 a share (total $92.6 million) from $0.98 a share ($81.8 million) in 2005. Revenue grew 6.6%, to $1.78 billion from $1.67 billion....

Advertisers continue to shift spending to Internet sites and away from newspapers and other print publications. But these three leading publishers are doing a good job adapting their businesses to the Internet, and profiting from it. They own some of the best-known brands in this industry, which gives their online properties instant credibility. Strong web sites also make it easier for them to attract advertisers with custom packages that include a variety of platforms. We feel all three will thrive as they expand their Internet activities. But only two are buys right now....

MCCORMICK & CO. LTD. $40 (New York symbol MKC; Income Portfolio, Consumer sector; WSSF Rating: Average) is thinking about acquiring a controlling stake in one of India’s biggest makers of spices and other foods. Demand for processed foods in India is growing strongly as average incomes rise. McCormick could use it to expand sales in other parts of Asia. The company has also raised its quarterly dividend 11.1%, from $0.18 a share to $0.20. The new annual rate of $0.80 yields 2.0%. But at 24 times earnings, the stock is vulnerable to a sharp drop on any earnings setback. McCormick is a hold....