Zacks Analyst Blog Highlights: Schlumberger Ltd., MIPS Technologies, Inc., Silicon Graphics, Inc., Fannie Mae and Freddie Mac

Business Wire, Oct 20, 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: Schlumberger Ltd. (NYSE: SLB), MIPS Technologies, Inc. (Nasdaq: MIPS), Silicon Graphics, Inc. (Nasdaq: SGIC), Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE).

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Here are highlights from Friday's Analyst Blog:

Schlumberger Upped to a Buy

We are upgrading Houston, Texas-based Schlumberger Limited (NYSE: SLB) shares to Buy from Hold following the recent sell off, which has made valuation very compelling. Schlumberger is a leading oilfield services company, providing technology, project management and information services to the global oil and gas industry.

While near-term commodity-price weakness may weigh on the stock price, the company's long-term prospects remain positive, given its strong international footprint, particularly in the Eastern Hemisphere.

MIPS Tech Priced Attractively

MIPS Technologies (Nasdaq: MIPS) develops embedded processors and intellectual property for use in performance-oriented markets, such as digital entertainment, wired and wireless communications (including broadband access), office automation, security and automotive markets. MIPS was spun off from Silicon Graphics, Inc. (Nasdaq: SGIC) in 1998, and is headquartered in Mountain View, California.

The valuation on MIPS has become very compelling as the stock has shed 67% from its 52-week high, and its new acquisition (the firm just completed an acquisition of Chipidea for $147 million in cash) has the potential to drive margin expansion. Chipidea is a Portuguese company that supplies analog and mixed signal intellectual property for the wireless, digital consumer and connectivity markets. Its product line enjoys higher margins than the legacy business and had a pro-forma operating profit of $1.7 million in the second quarter.

Not All Fannie & Freddie's Fault

There is a meme developing that the current financial crisis is all, or at least mostly, attributable to Fannie (NYSE: FNM) and Freddie (NYSE: FRE), with a strong supporting role for the Community Reinvestment Act (CRA). This is simply not true, even if it is repeated in respectable publications, or even in presidential debates. This is an important point to make, since if a doctor cannot make an accurate diagnosis, it is unlikely that he will write the correct prescription.

Let's review a little bit of history: Fannie dates from 1938, Freddie from 1968, and the CRA was passed in 1977. The worst of the bad mortgages were made from 2003 through the first half of 2007. It sure seems like a very long lead time for Fannie, Freddie or the CRA to be the culprit.

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