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Zacks Bull and Bear of the Day Highlights: ADC Telecommunications, Atmel Corp., Potash Corporation and Kroger

Business Wire, March 13, 2008

CHICAGO -- Zacks Equity Research highlights ADC Telecommunications (Nasdaq: ADCT) as the Bull of the Day and Atmel Corporation (Nasdaq: ATML) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on The Potash Corporation of Saskatchewan, Inc. (NYSE: POT) and Kroger Company (NYSE: KR). Full analysis of all these stocks is available at http://at.zacks.com/?id=2676.

Here is a synopsis of all four stocks:

Bull of the Day:

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Our Bull of the Day recommendation is for ADC Telecommunications (Nasdaq: ADCT), a global communications network infrastructure solutions provider, due to proliferating global fiber network connectivity which has considerably improved the company's earnings visibility. First quarter financial results were significantly above our estimates. Increasing demand for video streaming and the growing investment by enterprises for high-density data centers have fostered a further need for telecom service providers to implement FTTX networking. Another impetus for growth is ADCT's initiative for in-building wireless infrastructure solutions. Recent acquisitions of LGC wireless and Century Man not only generated strong revenue but also improved overall gross margins for the company.

Bear of the Day:

Our Bear of the Day recommendation is for Atmel Corporation (Nasdaq: ATML). The central problem for Atmel is translating sales growth into earnings growth. In order to achieve margin expansion, it is imperative for the company to turn to more efficient manufacturing technologies in order to boost the profitability of its flash and ASIC products. Given the continual pressure on prices, Atmel has been outsourcing more of its smart card manufacturing to foundry partners for .15 micron production. This, however, could lead to quality issues. Atmel has refocused its resources on its core Microcontroller product line and has already halted development on unprofitable product areas such as mobile phone baseband, Wireless LAN, Voice over IP, USB, Digital Audio Broadcast, and chip modules.

Analyst Blog:

The Potash Corporation of Saskatchewan, Inc. (NYSE: POT) is a Canadian corporation based in Saskatoon, Saskatchewan, and is the world's largest producer of potash. The company has leverage to higher fertilizer application rates, higher crop plantings, increasing demand for biofuels and rising crop prices. The company is located in low-cost areas and financials are solid. The company has excellent free cash flow. In 2007, the company achieved $1.7 billion of cash flow from operations. Potash is permitted to repurchase up to 5% of its outstanding common shares in the open market, which amounts to 15.82 million shares. The company also has a noticeably underleveraged balance sheet.

Kroger Company's (NYSE: KR) fourth quarter sales were $325 million above our forecast, and EPS were $0.02 ahead of our estimate. Higher food and gas prices helped boost identical supermarket sales, which increased 8.2% with fuel and 5.3% without fuel. As we expected, fourth quarter gross margins contracted 130 basis points. Despite strong fourth quarter results, Kroger issued guidance below consensus and our estimate. For fiscal 2008, Kroger anticipates earnings of $1.83 - $1.90 per diluted share. The company said it expects that earnings per share growth will be driven by strong identical sales, a slight improvement in non-fuel operating margins, and fewer shares outstanding. Identical supermarket sales growth is expected to be in the range of 3% to 5%, excluding fuel sales. We are reducing our 2008 EPS estimate by $0.04 and our 2009 EPS estimate by $0.09.

Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.

About the Bull and Bear of the Day

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

About the Analyst Blog

Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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Business Services Industry

Zacks Bull and Bear of the Day Highlights: ADC Telecommunications, Atmel Corp., Potash Corporation and Kroger

Business Wire, March 13, 2008

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