Zacks Analyst Blog Highlights: Developers Diversified Realty Corp., Microchip Technology, Inc., Liberty Global, Inc., Eclipsys Corp. and O2Micro International, Ltd

Business Wire, August 22, 2008

CHICAGO -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Developers Diversified Realty Corp. (NYSE: DDR), Microchip Technology, Inc. (Nasdaq: MCHP), Liberty Global, Inc. (Nasdaq: LBTYA), Eclipsys Corp. (Nasdaq: ECLP) and O2Micro International, Ltd. (Nasdaq: OIIM).

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Here are highlights from Thursday's Analyst Blog:

Developers Offers a Good Yield

Developers Diversified (NYSE: DDR) is a real estate investment trust (REIT) which specializes in the acquisition, ownership, development, redevelopment, leasing, and management of shopping centers and business centers.

The company reported FFO [funds from operations] of $0.82 per share during the 2nd quarter, in line with the company guidance, but $0.12 per share below our estimates. The miss was due to lower than expected transactional income. Overall 2nd quarter results were good as the company is still increasing rents on new/renewal rents.

Microchip with Near-Term Risk

Microchip Technology, Inc. (Nasdaq: MCHP) reported record revenues of $268.2 million in Q1:FY09, but was lower than our estimate of $271 million. Adjusted EPS (excluding one-time items) came in at $0.44, in line with our estimate. Business was strong across all segments.

Microcontroller sales were up 3% quarter over quarter [q/q] and up 2% year over year [y/y]. Flashbased controllers were up 3.5% q/q and 11.5% y/y. Non-GAAP gross margin came in at 61.6% from 61.5% in the prior quarter and 60.6% in the year-ago quarter. Microchip also announced a quarterly cash dividend of $0.338 on its common stock, a sequential dividend rate increase of 2.4% and up 14.6% y/y/. MCHP dividend rate is roughly 4%, one of the highest distributed in the semiconductor sector.

Liberty Tries to Cushion Downside

Liberty Global, Inc. (Nasdaq: LBTYA) is aggressively buying back shares, a move that we think will provide downside cushion to EPS and elevate the stock price for future acquisitions. In the coming years, we believe the company's earnings will continue to benefit from the triple play [Internet, cable and phone] as it signs up more customers in Europe, Japan, and Latin America.

However, in our view, Liberty's top-line and EBITDA growth will begin to decelerate in the second half of 2008, weighed down by the maturing Western European operations (37% of the company's total revenue and 46% of its operating cash flow) and soaring competition in certain markets, including Romania, Hungary, Austria, and other parts of Europe. We rate the shares a Hold.

Eclipsys Trading at a Premium

Eclipsys Corp. (Nasdaq: ECLP) reported second-quarter EPS that were in-line with our estimate on revenue that exceeded our forecast. We increased our fiscal 2008/2009 revenue estimates. The management narrowed its fiscal 2008 revenue guidance and reiterated its non-GAAP EPS guidance for the year. The company continues to execute in driving higher revenue from new and existing customers, completing successful implementations, and improving margins.

To stay competitive, ECLP introduced a clinical information solution called Sunrise Clinical Essentials in the first quarter that reduces implementation times and costs for clients and re-branded its Sunrise family of products as Sunrise Enterprise. At roughly a 1.8x P/E/G our 2009 EPS estimate, our target price moves to $25.

O2Micro with Plenty of Upside

O2Micro International, Ltd. (Nasdaq: OIIM) has a strong position in the notebook computing market and a growing position in the LCD monitor and LCD TV markets. Management has focused investments into these new vertical markets, attempting to broaden its product portfolio.

June quarter topline results met consensus estimates while the bottomline beat the consensus estimate. The LCD TV markets represent an opportunity to grow its revenue base and boost margins to the low sixties. However, the soft macro environment has delayed this. OIIM is pricing at very reasonable valuation. Consequently, we reiterate our Buy rating on OIIM.

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