• Lowe's Companies (NYSE: LOW) to report Q1 earnings; conference call scheduled for 9:00am.
• Campbell Soup Company (NYSE: CPB) to report Q3 earnings; Conference call scheduled for 10:00am.

• Senate Judiciary Committee Hearing on Global Internet Freedom & Corporate Responsibilty at 10:00am. Appearing: Google, Inc. (NASDAQ: GOOG), Cisco Systems, Inc. (NASDAQ: CSCO) and Yahoo! Inc. (NASDAQ: YHOO).
• Medtronic, Inc. (NYSE: MDT) to report Q4 earnings; conference call scheduled for 8:00am.
• Hewlett-Packard Company (NYSE: HPQ) to report Q2 earnings; conference call scheduled for 5:00pm.

• Federal Reserve: FOMC Minutes for April Meeting Released at 2:00pm
  
• Senate Judiciary Committee Hearing on Exploring Skyrocketing Oil Prices at 10:00am.
• PetSmart, Inc. (NASDAQ: PETM) to report Q1 earnings; conference call scheduled for 4:30pm.

• Barnes & Noble, Inc. (NYSE: BKS) to report Q1 earnings; conference call scheduled for 10:00am.
• CA, Inc (NASDAQ: CA) to report Q4 earnings; conference call scheduled for 5:00pm.

• Cerner Corporation (NASDAQ: CERN) to hold shareholder meeting at 10:00am.

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At the Warrillow conference - which focuses on small business - I saw how a variety of companies are making attempts to enter social media.

Take CDW, which is a mega information technology (IT) distributor. About a year ago, the company launched Conduit. Basically, it is a social networking site focused on small business IT pros.

According to Lauren McCadney - who heads up the effort - the site has grown organically, as members have connected with each other to solve problems. This is important since small companies usually have one or two IT pros in their organization. So yes, things can get isolated and loney.

But there were risks. After all, user-generated content can be tricky. What if members make bad comments about CDW?

"Members have good manners on the site," said McCadney. "It hasn't been a problem." In fact, there is a separate section, called CDW Talk, where members can vent.

Conduit has also found ways to monetize things, such as through sponsorships. For example, there is a makeover contest; that is, a small business can win up to $50,000 in services and support from Intel (NASDAQ: INTC), Hewlett-Packard (NYSE: HPQ) and Microsoft (NASDAQ: MSFT).

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

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In Next Inning newsletter, technology stock guru Paul McWilliams sees weakness in Hewlett Packard (NYSE: HPQ) as an opportunity to buy "one of the best-managed large cap tech companies in the world."

"Following Mark Hurd's appointment as CEO back in 2005, we turned cautiously bullish on the shares. It didn't take long to realize that he was not only making the right decisions, but also executing them swiftly and effectively.

"Hurd hit the ground running, trimming fat and restructuring both internal and sales channel operations. The net results were rapidly growing sales, improved profitability and a much higher stock price.

"Now, in line with our earnings preview, Hewlett Packard announced results that were better than the consensus expectation of the covering analysts; HPQ also raised its full year guidance.

"However, the real news is the company's intention to purchase EDS for $13.9 billion. The news of the acquisition has knocked the stock down to a level that represents a clear value opportunity.

"In my view, this is a brilliant move by HPQ and that the negotiated price represents a solid value for HPQ. I believe this represents an opportunity for investors to buy one of the best-managed large cap tech companies in the world at a clear value price."

Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.

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• DJIA 12,833.97 (-42.34; -0.33%)
• S&P500 1,403.42 (-0.16; -0.01%)
• NASDAQ 2,495.34 (+6.85; +0.28%)
• 10YR-TBond 3.909% (+0.134%)
• TOP 10 ANALYST CALLS

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MOST NOTEWORTHY:

• Smith & Nephew (NYSE: SNN) was cut to Underweight from Neutral at JP Morgan, citing deteriorating fundamentals in several of SNN's key business lines.
  
• Goldman removed British Sky Broadcasting (NYSE: BSY) from its Conviction Buy List and said shares continue to trade at all-time low multiples and that the timing with Sky-Virgin dispute remains unclear. Shares remain Buy rated.
  
• Friedman Billings downgraded Electronic Data Systems (NYSE: EDS) to Market Perform from Outperform based on valuation following the Hewlett-Packard (NYSE: HPQ) news.

• Goldman downgraded J Sainsbury (OTC: JSAIY) to Neutral from Buy and removed shares from the Conviction Buy List.
  
• Goldman also removed Hewlett-Packard from its Conviction Buy List.
  
• Citigroup cut BearingPoint (NYSE: BE) to Hold from Buy.
  
• Wachovia downgraded LHC Group (NASDAQ: LHCG) to Market Perform from Outperform.

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For the past year, Hewlett-Packard (NYSE: HPQ) posted revenues of $107 billion. So, to grow just 5%, the company will need to essentially create another Fortune 500 company.

That's something HP's CEO, Mark Hurd, definitely has mentioned on various occasions. Basically, how can a behemoth continue to grow?

Perhaps a smart strategy is to make big acquisitions?

Well, today HP has announced a hefty $13.9 billion buyout deal for EDS (NYSE: EDS), an information technology (IT) consulting operator. Over the past year, EDS posted about $22 billion in revenues.

But Hurd is not just concerned about the top-line. If anything, he's highly disciplined with generating profits. In fact, since he has come on board HP (back in 2005), Hurd has been masterful in finding efficiencies - while still pushing revenue growth.

While the history of transformative M&A is filled with failures, with the HP-Compaq combination a prime example of what can go wrong, the strategic rationale for the EDS deal makes sense. In today's global environment, customers want strong technologies but also sophisticated services. Actually, companies are increasingly outsourcing services to players like EDS.

Moreover, with much more heft, HP and EDS will become a formidable alternative to IBM (NYSE: IBM), which has proven the technology/services model.

Finally, I'm sure that Hurd will take out his cost-cutting knife. It's something that hasn't been emphasized but I'm sure it will be a big part of the deal.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

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The Wall Street Journal reports that Hewlett Packard (NASDAQ: HPQ) will spend $12.8 billion to buy Electronic Data Systems (NYSE: EDS). While this combination would make HP the second largest, behind International Business Machines (NYSE: IBM) in computer services, this may not be a good way to spend $12.8 billion.

That's because EDS and HP would under perform in services when it comes to profitability. EDS's bigger business earned a 1% net profit margin in the first quarter. But HP's services business generated a far higher 9% estimated net margin. Unfortunately -- for reasons described below -- the combined company will probably have lower margins.

Meanwhile, IBM's profit lagged HP's slightly -- it made an estimated 7% net margin in the first quarter in its services business. But IBM is and will remain a much bigger player. Combined, EDS and HP's services business will control 5.3% -- lagging IBM. That's because IBM controlled 7.2% of the tech-services market in 2007 while EDS was a distant second at 3% and HP was fifth, with a 2.3% share.

I think HP's most profitable business, printers, might be able to make better use of the $12.8 billion in capital. This Imaging and Printing Group earned a 13% estimated net margin. It grew a mere 4% to $7.3 billion in revenue and given that this unit is by far the most profitable in HP's stable of businesses, this would appear to be the best place to invest for future growth.

Now may be a good time to sell HP stock. Mark Hurd came into HP as a nuts-and-bolts operator. This deal suggests that Hurd has run out of growth options and that HP can't grow earnings through more cost cuts. I have no doubt that Hurd could cut costs once EDS has been integrated.

However, government work -- which accounts for the biggest part of EDS's revenue -- is inherently less profitable than the commercial work which HP performs in its services business. So, I would guess that the EDS merger will lower HP's services margins.

What HP really needs -- and lacks due to Hurd's particular skills -- is the ability to innovate as it did successfully in printers back in the 1980s and 1990s when it invented the highly profitable printer and ink business.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

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• Power Stock Rankings: Energy
• Cramer Interviews Foster-Wheeler CEO

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By looking at other companies that sell services and PCs, it has occured to Hewlett-Packard (NYSE: HPQ) that the hardware business is getting more competitive and that margins are moving down, But hardware is still the largest revenue center at the big tech company, and that may be the single greatest failing of the current management. It has not created large enough software and services businesses to match the hardware sales.

HP brings in less that 25% of its revenue from services. But that business is growing quickly. According to the company's 10-Q, it had revenue of almost $4.4 billion in the first quarter. In the same period a year ago, that number was $3.9 billion.

The prevailing theory is that HP plans to buy EDS (NYSE: EDS) for $12.6 billion for its revenue from consulting and outsourcing to better compete against IBM (NYSE: IBM). That may be true, but the actual reason may be much more simple than that. With its stock up 50% over the last two years, HP needs a new business to keep its revenue growing and its shareholders happy. That is not going to come from its ink and printer business. Buying EDS almost guarantees another two years of rising revenue and earnings.

Douglas A. McIntyre is an editor at 247wallst.com and the author of the Ten Stocks Under $10 letter.

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EDS (NYSE:EDS) is up 2% on news of a takeover by Hewlett-Packard (NYSE:HPQ) with most of the gain coming yesterday afternoon when rumors surfaced.

HP is off 1.2% after a sharp drop near the end of the close yesterday.

Deutsche Telekom (NYSE:DT) is off 3% on continuing rumors that it might buy in to Sprint (NYSE:S).

Hoku Scientific (NASDAQ:HOKU) is off 7% on weak earnings.

Douglas A. McIntyre is an editor at 247walls.com and author of the Ten Stocks Under $10 letter.

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Hewlett-Packard (NYSE: HPQ) is closed down $2.48 to $46.65.

The WSJ reported HPQ is in advanced talks to acquire Electronic Data Systems (NYSE: EDS) for between $12 billion and $13 billion according to sources.

HPQ call option volume of 59,863 contracts compares to put volume of 21,209 contracts. HPQ June option implied volatility of 35 is near its 26-week average of 33 according to Track Data, suggesting slightly larger price risk.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

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• Sprint Nextel Corp. (NYSE: S) to report Q1 earnings; conference call at 8:00am.
• W.W. Grainger, Inc. (NYSE: GWW) to hold sales conference call at 8:00am.
• XM Satellite Radio Holdings, Inc. (NASDAQ: XMSR) and Sirius Satellite Radio, Inc. (NASDAQ: SIRI) to report quarterly earnings; the conference call is at 10:00am for XM and at 4:30pm for Sirius.

• Wal-Mart Stores, Inc. (NYSE: WMT) to report Q1 earnings; conference call at 7:30am.
• Toll Brothers, Inc. (NYSE: TOL) to report preliminary Q2 results and outlook at 2pm.
• Applied Materials, Inc. (NASDAQ: AMAT) to report Q2 earnings; conference call at 4:30pm.

• FCC Open Commission Meeting at 9:30am.
• SEC Open Commission Meeting at 10:00am.
• Macy's, Inc. (NYSE: M) to report Q1 earnings; conference call at 10:30am.
• Agilent Technologies, Inc. (NYSE: A) to report Q2 earnings; conference call at 4:30pm.

• FERC Open Commission Meeting at 10:00am.
• Hewlett Packard Company (NYSE: HPQ) to report Q2 earnings; conference call at 5:00pm.

• PDUFA date for Salix Pharmaceuticals, Ltd. (NASDAQ: SLXP)'s Colazal for treating mild to moderate ulcerative colitis.
• Landstar System (NASDAQ: LSTR) to give mid-quarter update conference call.

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Hewlett Packard (NYSE: HPQ) shares opened in the red by more than 1% today, but have been regaining ground after laptop maker Compal Electronics Inc. lowered its shipment growth forecast for the second quarter to 10% from its previous estimate of 13-15%. Compal supplies laptops to HPQ, and said a shortage of batteries is responsible for the revised forecast. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on HPQ.

After hitting a one-year high of $53.48 in November, the stock hit a one-year low of $39.99 in January. This morning, HPQ opened at $48.24. So far today the stock has hit a low of $47.54 and a high of $53.48. As of 12:15, HPQ is trading at $48.15, down $0.12 (-0.25%). The chart for HPQ looks bullish and deteriorating slightly, while S&P gives the stock a bullish 4 Stars (out of 5) Buy rating.

For a bearish hedged play on this stock, I would consider a May bear-call credit spread above the $50 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in nine trading days as long as HPQ is below $50 at May expiration. HP would have to rise by more than 9% before we would start to lose money. Learn more about this type of trade here.

HPQ hasn't been above $50 since early January and has shown resistance around $48.50 recently. This trade could be risky if the company's earnings (due out on 5/15) are a positive surprise, but even if that happens, this position could be protected by resistance HPQ might find around $48, where it has topped out a few times over the past three months.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in HPQ.

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Double-Take Software (NASDAQ: DBTK) products and services enable customers to protect and recover computer files. Its software helps users to reduce or eliminate data loss and recover applications, through automatic or manual means. Customers include law firms, financial institutions, hospitals, school districts and government entities. Hewlett-Packard (NYSE: HPQ) and Microsoft (NASDAQ: MSFT) are among the firm's strategic partners. EMC Corporation (NYSE: EMC) and Symantec (NASDAQ: SYMC) are major competitors.

The company surprised the Street last week, when it reported Q1 EPS of 13 cents and revenues of $23 million. Analysts had been looking for 11 cents and $22.2 million. Management also guided Q2 EPS to 15-16 cents (14 cent consensus), Q2 revenues to $24.4-$25 million ($24.44M consensus), FY08 EPS to 65-67 cents (65 cent consensus) and FY08 revenues to $101.7-$103.5 million ($102.29M consensus).

DBTK shares popped into a bullish "flag" consolidation pattern on the news. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Brokers recommend the issue with four "strong buys" and five "buys". Analysts see a 33% growth rate, through the next year. The DBTK P/E ratio (17.52), Price to Book ratio (4.09), Price to Cash Flow ratio (14.69), Price to Free Cash Flow ratio (15.42), Sales Growth rate (28.49%), Operating Margin (20.01%), Net Profit Margin (21.97%), Return on Assets (19.90%), Return on Investment (28.24%) and Return on Equity (30.30%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 65% of the outstanding shares. Over the past 52 weeks, the stock has traded between $9.90 and $26.54. A stop-loss of $12.60 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.

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LSI Corporation (NYSE: LSI) designs, develops and markets semiconductors used by original equipment manufacturers in the data networking and consumer electronics markets. It also provides a wide variety of storage systems, sub-assemblies, and storage management software applications. Top clients include Hewlett-Packard (NYSE: HPQ), IBM (NYSE: IBM) and Sony (NYSE: SNE).

The firm surprised the Street last week, when it reported Q1 EPS of ten cents and revenues of $660.75 million. Analysts had been looking for seven cents and $636 million. Management also guided Q2 EPS to 8-12 cents (seven cent consensus) and Q2 revenues to $650-$680 million ($634.62M consensus). Kaufman Brothers and Caris subsequently declared the stock a "buy". Friedman Billings and Deutsche Securities called it a "hold". All four firms upped their price targets from the range $4.50-$6.00 to the range $6.50-$7.00.

LSI shares popped on the news and are now forming a bullish "pennant" consolidation pattern. Prices frequently exit pennants moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Brokers recommend the issue with three "strong buys", two "buys", ten "holds" and one "sell". Analysts estimate a 24% average annual growth rate, through the next five years. The LSI Price to Sales ratio (1.41), Price to Book ratio (1.73), Price to Free Cash Flow ratio (18.17) and Sales Growth rate (25.00%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 90% of the outstanding shares. The stock is one of those used to calculate the S&P 500 Index. Over the past fifty-two weeks, it has traded between $3.75 and $9.08. A stop-loss of $5.25 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He holds a position in LSI, but not in the other issues mentioned.

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