GENERAL ELECTRIC CO. $17.85, New York symbol GE, moved up this week after the company said it would further scale back the activities of its struggling finance division. GE Capital now accounts for about 50% of GE’s total earnings. Through sales of certain financing businesses, the company now aims to reduce GE Capital’s earnings contribution to 30% by the end of 2009. GE now feels it will earn $0.50 to $0.52 a share in the fourth quarter of 2008. That’s down from its earlier forecast of $0.50 to $0.65 a share. These figures exclude restructuring and other charges of up to $1.4 billion. Even with these charges, GE will still earn over $18 billion in 2008. The company also plans to keep paying its $1.24 dividend (6.9% yield) in 2009. GE is a buy....

AT&T INC. $28 (New York symbol T) earned $0.55 a share in the third quarter of 2008, up 10.0% from $0.50 a year earlier. Most of that gain was due to strong demand for Apple’s iPhone and high-speed Internet services. If you exclude costs related to acquisitions and other unusual items, earnings per share fell 5.6% to $0.67 from $0.71. Revenue grew 4.0%, to $31.3 billion from $30.1 billion. Buy. BUCKEYE PARTNERS L.P. $35 (New York symbol BPL) has raised its quarterly distribution rate by 1.4%, from $0.8625 a unit to $0.875. The new annual rate of $3.50 yields 10.0%. Buckeye’s recent acquisitions of natural gas storage terminals cut its reliance on its traditional gasoline and jet fuel pipelines. The new operations should also help it keep raising its distributions. Buy. NEWELL RUBBERMAID INC. $12 (New York symbol earned $0.36 a share before one-time items in the third quarter of 2008, down 30.8% from $0.52 a year earlier. Most of the drop was due to lower consumer spending on its household products. Sales grew 4.3%, to $1.8 billion from $1.7 billion, due to acquisitions. The company uses oil to make many of its products, so falling oil prices help its profit margins. The $0.84 dividend still seems secure, and yields 7.0%. Buy.

SONY CORP. ADRs $20 (New York symbol SNE; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1.0 billion; Market cap: $20.0 billion; WSSF Rating: Above average) is one of the world’s leading makers of consumer electronics. Top brands include Bravia (TV sets) and Vaio (computers). This business accounts for 67% of its revenue. The company’s other businesses include PlayStation video games (14% of revenue), motion picture and TV programming through Columbia Pictures (10%), financial services (6%) and other (3%). Sony has restructured its operations in past few years, mainly to take advantage of growing consumer demand for high-definition, flat-screen TV sets. Sales fell from $72.1 billion in 2003 to $63.9 billion in 2005 (fiscal years end March 31), as the company phased out its older products. However, new products helped push sales up to $89.3 billion in 2008.

Cost cuts spur big earnings jump

Besides launching new products, the company also aggressively cut its operating costs. Earnings rose from $0.89 per ADR (total $871 million) in 2003 to $1.52 per ADR ($1.6 billion) in 2004, but fell to $1.00 per ADR ($1.1 billion) in 2005. (Each American Depository Receipt represents one Sony common share.) Thanks to the success of the restructuring, earnings improved to $3.53 per ADR ($3.7 billion) in 2008....

CEDAR FAIR L.P. $14 (New York symbol FUN; Income Portfolio, Consumer sector; Units outstanding: 55.1 million; Market cap: $771.4 million; WSSF Rating: Average) plans to spend $62 million on new rides and other attractions in 2009. New attractions should help spur Cedar Fair’s attendance. Rising gasoline prices and a slowing housing market cut the number of visits by 3% in the third quarter of 2008. Consequently, revenue in the quarter fell by 4.8%, to $540.3 million from $567.5 million a year earlier. Earnings grew 68.4%, to $1.65 a unit (total $91.5 million) from $0.98 a unit ($54.1 million). However, the year-earlier quarter included a $39.2 million pre-tax restructuring charge. Cedar Fair’s long-term debt of $1.7 billion is a high 2.6 times its market cap. The company generates annual cash flow of roughly $200 million. That should help it steadily pay down its debt, as well as maintain quarterly distributions of $0.48 a unit (13.7% yield). Lower gas prices should also help Cedar Fair’s earnings in 2009....

NORDSTROM INC. $12 (New York symbol JWN; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 215.4 million; Market cap: $2.6 billion; WSSF Rating: Average) earned $71 million in its third fiscal quarter ended November 1, 2008, down 57.2% from $166 million a year earlier. However, the year-earlier quarter included a $20.9 million after-tax gain on the sale of a division. Per-share earnings fell 51.5%, to $0.33 from $0.68, on fewer shares outstanding. Sales declined 8.4%, to $1.8 billion from $2.0 billion. Same-store sales fell 11.1%. The company currently operates 169 stores, and plans to open about 20 new stores in the next four years. This expansion has pushed up its long-term debt to $2.2 billion, which is now a high 85% of its market cap. That increases its short-term risk, particularly if sales continue to weaken. However, Nordstrom’s focus on affluent shoppers and strong attention to customer service should help it stay profitable during the current slump. As well, sales at Nordstrom’s Internet operations continue to grow strongly. Nordstrom is a buy....

MICROSOFT CORP. $20 (Nasdaq symbol MSFT; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 8.9 billion; Market cap: $178.0 billion; WSSF Rating: Above average) is the world’s largest software company. Its Windows operating system runs roughly 90% of the world’s computers. Microsoft’s Office suite of programs also dominates the business software field. Windows and Office currently supply about 60% of Microsoft’s total revenue. Microsoft is much less risky than other software makers we recommend, such as Symantec and Autodesk, mainly because of the steady cash flows from its Windows and Office programs. However, growing competition from online programs and data storage services could threaten Microsoft’s dominance. That’s why we continue to include Microsoft in our Aggressive Portfolio, instead of the Conservative Portfolio. The company is steadily reducing its reliance on Windows and Office. For example, its Xbox video game machine and other entertainment products now supply about 15% of Microsoft’s total revenue....

ABB LTD. ADRs $13 (New York symbol ABB; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 2.3 billion; Market cap: $29.9 billion; WSSF Rating: Above average) has moved down from $33 in May, 2008. The company makes electrical power transmission and distribution equipment, and a slowing economy could hurt electricity demand. We feel the long-term outlook for ABB is still bright. Many electrical utilities still need to increase their generation and transmission capabilities, plus replace old systems. ABB also stands to gain from government stimulus spending in the United States and other countries on new infrastructure projects. As well, demand for ABB’s automated industrial equipment should grow strongly as the economy rebounds. That’s because robotic assembly machines help manufacturers cut their labor costs. ABB is a buy.

H.J. HEINZ CO. $38 (New York symbol HNZ; Income Portfolio, Consumer sector; Shares outstanding: 314.4 million; Market cap: $11.9 billion; WSSF Rating: Above average) earned $0.87 a share (total $276.7 million) in its second fiscal quarter ended October 29, 2008, up 22.5% from $0.71 a share ($227.0 million) a year earlier. That was mainly due to a $92.4 million pre-tax gain on currency exchange hedging contracts, which added about $0.17 a share to Heinz’s latest quarterly earnings. Sales grew 3.5%, to $2.6 billion from $2.5 billion. Heinz’s well-known brands make it easier for it to pass along higher food and other costs to consumers. Expanding sales in emerging markets also contributed to the overall gain. Heinz should benefit from the slowing economy, as more people choose to eat at home instead of in restaurants. The stock trades at a reasonable 13.1 times the $2.90 a share it will likely earn in fiscal 2009. The $1.66 dividend yields 4.4%. Heinz is a buy.

MOTOROLA INC. $4.15 (New York symbol MOT; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 2.3 billion; Market cap: $9.5 billion; WSSF Rating: Average) has postponed its plan to split itself into two publicly traded companies — the mobile business (52% of sales in 2007), and the wireless infrastructure and home equipment operations (48%). It had aimed to complete the split in the third quarter of 2009. However, the credit crisis could make it difficult for the new companies to borrow money. Meanwhile, Motorola lost $0.18 a share (total $397 million) in the three months ended September 30, 2008. Higher losses at the mobile division offset stronger earnings at the other two operations. The company earned $0.02 a share ($40 million) in the year-earlier quarter. Sales fell 15.1%, to $7.5 billion from $8.8 billion. Sales at the mobile phone business fell 31% in the latest quarter. The company is now aggressively cutting costs, and aims to save $800 million a year. However, losses at the mobile phone division will probably continue to grow in the next few months....

Many technology stocks have plunged 50% or so in the past three months. That’s due to fears that the slowing economy will prompt businesses and consumers to buy fewer computers and cellphones. We feel proven tech leaders, such as these six, have a lot of appeal. They all have plenty of cash for research, and little debt. New products from this research will give them a competitive advantage, and spur their sales as the economy rebounds. As well, all six now trade for about 10 times earnings, down from 30 to 40 times a few years ago. Their p/e’s should eventually creep up, as their research spending pays off. That could lead to big gains for patient investors. But only some are buys right now....