For Immediate Release
Chicago, IL – April 13, 2010 – 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: Bank of America (BAC), Goldman Sachs (GS), NetApp Inc. (NTAP), International Business Machines (IBM) and EMC Corporation (EMC).
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Here are highlights from Monday’s Analyst Blog:
Federal Budget Deficit Soars
T he improvement in the year-to-date spending comes even in the face of a 19.8% increase in the interest on the national debt to $201.929 billion. Off-budget spending (Social Security benefits) rose by 8.54% to $269.10 billion. Thus, Social Security is still running a surplus so far this year, but it is much smaller — only $36.074 billion rather than the $71.379 billion surplus in the first half of 2009.
This report is very welcome news, but it probably will not last. Much of the year-to-date improvement has come from the big banks like Bank of America (BAC) and Goldman Sachs (GS) paying back the TARP, and that is not going to last forever. However, much of the spending is fixed, most notably the interest on the debt.
Federal salaries make up a very small portion of the overall expenditures, especially if you are only looking at civilian salaries. Declining tax revenues have played a bigger role in the expansion of the deficit over the past few years than has increased spending. Some of that was deliberate — for example, about one-third of the ARRA (the Stimulus Bill) was in the form of tax cuts.
However, most of it was simply due to lower overall economic activity. People out of work are not paying as much in income taxes, and small businesses earning less and thus having less income to tax. This would not be a great time to increase taxes or cut spending, since either would impose a drag on the economy when it is still very weak. However, we do need a plan to bring down the deficit sharply in the future, and to do so will require both tax increases and spending cuts.
NetApp Grabs Bycast
Leading storage and data management solutions company NetApp Inc. (NTAP), recently disclosed that it will be acquiring a privately held object-based storage software developer Bycast Inc. Bycast was a rival company of NetApp, which will be acquired in an all-cash transaction, although the amount involved in the deal was not disclosed.
We believe that this deal will be beneficial for NetApp, as the Bycast acquisition is expected to augment NetApp’s leadership position by enhancing its product portfolio with an object-based storage software offering. The company believes that this acquisition, will enable it to expand its customer base to new markets including digital media, cloud service providers, healthcare and Web 2.0.
The Object-based storage software incorporates a new method of storage and access of data by using object names and also helps to retrieve rich metadata that provides a detailed description of the content, which also facilitates the process of storing large objects, at the same time improving the search speed.
The company is already facing stiff competition from technical behemoths like International Business Machines (IBM) and EMC Corporation (EMC) in the data storage and management software space and we believe this acquisition will give it a much-needed competitive edge to create its own space in this domain.
NetApp has rolled out encouraging third quarter 2010 numbers, with EPS of 40 cents, exceeding the Consensus estimate of 38 cents per share. This apart, revenue grew substantially during the third quarter to reach $1.01 billion, improving by a staggering 35.5% compared to the year-ago period, attributable to the revival in all business segments after facing a year-long recession.
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