bmo research highlights apr 14

8/9/2019 BMO Research Highlights Apr 14

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April 14, 2010

TODAY'S HIGHLIGHTS

U.S. Canadian / Int'lEstimates/Targets Raised Electronics for Imaging United Company RUSAL

Qualcomm

Intel

Estimates/Targets Lowered Westamerica Bancorp Progress Energy Resources

Cascades

Sector RevisionsToys & Juvenile Products: 1Q10 Preview: Toys & Juvenile Products Still...

FINANCIALS

Banks Canada TD Bank Investor Day - Focus on Wealth Management

Banks U.S. Westamerica Bancorp Solid 1Q Results, But Growth is Challenging

REITs U.S. Sector Comment Storage to Ride Apartment Bandwagon?

ENERGY & UTILITIES

North American E&P Canada Progress Energy Resources Montney Drilling Success

MATERIALS

Metals & Mining Canada United Company RUSAL Target Price Raised to HK$9.50; 2009 Results Slightly...

Paper & Forest Prod. Canada Cascades Estimates Revised

CONSUMER

Toys & Juvenile Products Sector Comment 1Q10 Preview: Toys & Juvenile Products Still...

TECH/TELECOM/MEDIA

Enterprise Hardware U.S. Electronics for Imaging Better, In the Stock

Comms Equip U.S. Qualcomm Tweaking Numbers Ahead of Quarter; Expect Conservative...

Comms Equip Sector Comment Wireless Earnings Preview

Semiconductors U.S. Intel Not Your Father's Intel
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This report was prepared by an analyst(s) employ d as a research analyst(s) underFINRA rules. For disclosure statements, including

TD Bank(TD-TSX; TD-NYSE)

Stock Rating: OutperformIndustry Rating: Market Perform

Member of: Top 15 Large Cap Stock SelectionsTop 15 Income Stock SelectionsTop 15 Quantitative Stock Selections

April 14, 2010Research CommentToronto, Ontario

John Reucassel, CFABMO Nesbitt Burns Inc.(416) [email protected]: John Fong, CFA, FSA

Price (13-Apr) $74.62 52-Week High $76.9Target Price $80.00 52-Week Low $45.8

Investor Day Focus on Wealth Management

ed by BMO Nesbitt Burns Inc., and who is (are) not registerethe Analyst's Certification, please refer to pages 5 to 8.

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Toronto-Dominion Bank (TD)

Price: High,Low,Close Earnings/Share

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Event

TD Bank Financial Group hosted an investor day highlighting its wealthmanagement operations excluding TD Ameritrade.

Impact

Positive. We have argued for over 10 years that that the long-term competitive

advantage in Canadian wealth management will be driven by distribution. By

this metric, TD, through its 1,000-branch network and over 1,400 advisors as

well as dominant discount broker operations, is very well positioned to continue

to grow its share of mutual fund, high net worth and institutional businesses.

Harvesting TDs deep retail deposit base should also provide a steady source of

net flows. Rebounding equity markets should sustain strong earnings growth

through 2010 and 2011 in this segment.

Forecasts

No change.

Valuation

Our $80 target price represents 12.2x our 2011E cash EPS estimate.

Recommendation

TD remains rated Outperform. In addition to rising equity markets, spreads in

wealth management should rise with higher short-term rates. If spreads widenedby 100 basis points (i.e., back to spreads achieved in 2007), NII in the wealth

management segment could rise up to $140mm annually. Overall, a positive

tone to the presentation, which highlighted that even in the face of declining

domestic loan growth in 2010 and 2011, TD has growth opportunities in other

segments.

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100Volume (mln)

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2005 2006 2007 2008 200980

100

120TD Relative to S&P/TSX Comp

Last Data Point: April 12, 2010

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120

(FY-Oct.) 2008A 2009A 2010E 2011E

EPS - Cash $5.39 $4.19 $5.70 $6.5P/E 13.1x 11.4

EPS - GAAP $5.00 $3.61 $5.14 $5.9P/E 14.5x 12.5

Cash ROE 16.2% 14.2% 14.8% 15.8%Specific Prov.($mm)$1,063 $2,016 $2,172 $1,285Dividend $2.36 $2.44 $2.44 $2.4Tier One Capital 9.8% 11.3% 11.6% 12.3%

Quarterly EPS - Cash Q1 Q2 Q3 Q

2008A $1.42 $1.24 $1.34 $1.32009A $0.96 $0.82 $1.16 $1.22010E $1.57a $1.37 $1.37 $1.3

Dividend $2.44 Yield 3.3%Book Value $41.86 Price/Book 1.8

Shares O/S (mm) 862.0 Mkt. Cap ($mm) $64,32Float O/S (mm) 862.0 Float Cap ($mm) $64,32Wkly Vol (000s) 17,043 Wkly $ Vol (mm) $1,037.Net Debt ($mm) na Next Rep. Date 27-May (E

Notes: All values in C$; EPS fd; CEPS add back amort. of intang. goodwill; 2006 EPS ex. gain on AMTD & otherMajor Shareholders: Widely heldFirst Call Mean Estimates: TORONTO-DOMINION BANK (C$)2010E: $5.83; 2011E: $6.68


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Please r cluding the Analyst's Certificatio

Westamerica Bancorp(WABC-OTC)

Stock Rating: Market PerformIndustry Rating: Market Perform

April 13, 20

Ban

Lana Chan Peter J. Wint

BMO Capital Markets Corp. BMO Capital Markets Co212-885-4109 [email protected] [email protected]

Jonathan Katz Virginia Chiare212-885-4066 212-885-41

[email protected] virginia.chiarello@bmo.

Solid 1Q Results, But Growth is Challenging Securities InfoPrice (13-Apr) $58.67 Target Price $552-Wk High/Low $61/$45 Dividend $1Mkt Cap (mm) $1,715 Yield 2.Shs O/S (mm, BASIC) 29.2 Float O/S (mm) 2Options O/S (mm) na ADVol (30-day, 000s)

Price Performance

Event

WABC reported 1Q10 EPS of $0.80 versus $0.76 a year ago. This was in

line with our estimate and a penny above consensus.

efer to pages 7 to 9 for Important Disclosures, in

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WESTAMERICA BANCORPORATION (WABC)Price: High, Low,Close(US$) Relati ve to S&P 500

ImpactThe results were solid, driven by net interest margin expansion, good

expense control, and stable credit quality trends. The key challenge,

however, remains balance sheet growth as both loans and deposits declined

sequentially. There is also some revenue risk from legislation on NSF fees,

although an economic recovery would benefit other fee income lines. WABC

sports strong capital ratios, positioning it well for acquisitions.

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Forecasts

We are lowering our EPS estimates to $3.22 (from $3.35) for 2010 and to$3.40 (from $3.65) for 2011. This reflects further contraction in loan

volumes as demand remains weak and competition has increased. Also, we

are factoring in a decline in deposit service charges as a result of legislation

on NSF fees. We are also lowering our fully normalized EPS estimate to

$3.65 (from $3.70).

ValuationWABC shares are trading at 16.1x our fully normalized EPS estimate and

4.7x tangible book value, versus the small-cap bank group medians of 10.5x

and 1.9x.

RecommendationWe maintain our MARKET PERFORM rating, but are adjusting our price

target to $50 (from $51). Our price target is based on a target forward P/E

multiple of 15x (a premium to the small-cap bank group target multiple of

12x) our fully normalized EPS estimate of $3.65, discounted by 10%.

Changes Annual EPS Annual Bk Val/Share Quarterly EPS Target 2010E$3.35to$3.22 2010E$19.22to$19.11 Q2/10E$0.82to$0.80 $51.00to$50.00

2011E$3.65to$3.40 2011E$21.42to$21.08 Q3/10E$0.85to$0.81Q4/10E$0.87to$0.81

2005 20 06 2007 2008 2009

Volume (mln)


Valuation/Financial Data

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(FY-Dec.) 2009A 2010E 2011E 2012E

EPS Pro Forma $3.15 $3.22 $3.40 nP/E 18.2x 17.3x nFirst Call Cons. $3.24 $3.50 $4.0EPS GAAP $3.15 $3.22 $3.40 n

Bk Val/Share $17.31 $19.11 $21.08 nPrice/Book 3.1x 2.8x nTang. BV/Shr $11.92 $13.78 $15.75 nPrice/TB 4.3x 3.7x n

Quarterly EPS 1Q 2Q 3Q 4Q

2009A $0.80 $0.75 $0.81 $0.72010E $0.80A $0.80 $0.81 $0.8

Balance Sheet Data (31-Mar)ROE 1.99% Exp./Revenues 44.20%ROA 18.80% Net Charge-Offs/Loans 0.65%

NPAs/Loans+OREO 1.63% Tang. Common/Assets 7.92%Reserve/Loans 1.88%

Notes: All values in US$.

Source: BMO Capital Markets estimates, Bloomberg, FactSet, GlobInsight, Reuters, and Thomson Financial.


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Page 1 April 13, 20

REITs

Industry Rating: Market Perform

April 13, 20

Paul E. Adornato, CFBMO Capital Markets Co

[email protected]

Mark Lutenski Earnest L. Sw212-885-4197 [email protected] earnest.sweat@bmo

Storage to Ride Apartment Bandwagon?Summary

We believe some investors may be buying

storage REITs as a derivative play on the popular

notion that apartment REITs are poised to enjoy

significant rent growth. However, a quick reviewof annual total returns for apartment and storage

REITs (Exhibit 1) shows that in 7 out of 14 years,

the sectors diverged in performance relative to

the REIT Index, meaning one outperformed while

the other underperformed.

We think the link from multifamily to storage is

tenuous at best, and argue that the opposite may

be true as renters who doubled up during the

recession may look to rent a standalone space

again, increasing their personal square footage

and lessening the need for storage.

Storage rents continue to decline versus in-place

rents, implying negative same-store NOI growth

for the next several quarters. While usually a

laggard vs. the CCI, storage REIT performance

has recently jumped ahead, which could be a

reason to take profits, in our view. We still like

industrials as a good substitute for storage and

have OP ratings on DRE, DCT, and FPO.

Included in this report is our proprietary self-

storage survey, which collects rent and discount

data from seven metropolitan areas. We note

that the level of heavy discounts is currently the

highest in the six years we have conducted the

survey. We also observed that rents continue to

decline, but the rate of decrease is less than that

in our two prior surveys.

We believe some investors may be buying storage REITs as a derivative

play on the popular notion that apartment REITs are poised to enjoy

significant rent growth. However, a quick review of annual total returns for

apartment and storage REITs (see Exhibit 1) shows that in 7 out of 14 years,

the sectors diverged in performance relative to the REIT Index, meaning one

outperformed while the other underperformed.

We think the performance of the self-storage group (up 16.1% YTD) is

being driven largely by the belief that storage will benefit as the multifamily

markets recover. However, we think the link to storage is tenuous at best,

and argue that the opposite may be true as renters who doubled up during the

recession may look to rent a standalone space again, increasing their

personal square footage and lessening the need for storage.

Further, storage rental rates continue to decline versus in-place rates,

implying negative same-store NOI growth for the next several quarters.

Looking at year-over-year storage REIT performance versus the consumer

confidence index (CCI) seems to show that storage stocks lag the CCI. Most

recently, storage REIT performance has jumped ahead of the CCI, which

could be a reason to take profits in storage names. We still like industrials as

a good substitute for storage and have OUTPERFORM ratings on DRE,

DCT, and FPO.

Included in this report is our proprietary self-storage survey, which collects

rent and discount data from seven metropolitan areas. We note that the level

of heavy discounts is currently the highest in the six years we have

conducted the survey. We also observed that rents continue to decline, but

the rate of decrease is less than that in our two prior surveys.

Refer to pages 7 to 12 for Important Disclosures, including Analyst's Certification.


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Progress Energy

Resources(PRQ-TSX)Stock Rating: OutperformIndustry Rating: Market Perform

April 13, 2010Research CommentCalgary, Alberta

Mark Leggett, CFA(403) [email protected]: Jason Chang

Montney Drilling SuccessPrice (13-Apr) $12.23 52-Week High $15.2Target Price $15.50 52-Week Low $8.5Event

Progress announced production from the Town South development project was

brought on-stream in late March, increasing total Montney production to ~30

MMcf/d from 8 MMcf/d at the beginning of the year. Four additional horizontal

wells (six to nine fracs per leg) were drilled and completed in Q1/10 ($6.5million per well) with five-day test rates of 4 to 7 MMcf/d. Currently, there are

five horizontal wells on-stream at a combined restricted rate of 20 MMcf/d. An

additional eight to 10 horizontal wells at Town have been budgeted for 2010.

Progress also drilled or recompleted successful vertical delineation wells at

Town, Kobes, Altares, Caribou, Gundy and Lily with test rates averaging 1.5

MMcf/d. An initial pilot program at Kobes has been initiated with two (0.8 net)

wells to be completed in early Q3/10. Progress also expects to initiate three

additional horizontal pilot programs in 2010 as a follow-up to successful vertical

delineation drilling. A 2010 capital budget of $350 million was reiterated.

Progress Energy Resources Corp. (PRQ)Price: High,Low,Close

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Impact

Slightly Positive.

Forecasts

We have adjusted our 2010 production forecast to 40,729 boe/d (down 846

boe/d), while our 2011 production forecast of 47,720 boe/d remains unchanged.

As such, our 2010 CFPS estimate has been slightly lowered to $1.07, while our

2011 CFPS estimate of $1.47 is unchanged.

Valuation

Progress trades at premium 2010E valuation multiples of 11.4x P/CFPS and

14.0x EV/EBITDA. Our target price is supported by our updated sum-of-parts

NAV analysis of $17.07 per share (AECO $5.75/Mcf).Recommendation

We continue to rate Progress shares Outperform. We look for further horizontal

drilling success to enhance visibility on the aerial extent of the companys

Montney acreage. The deep Nikanassin Ojay program represents an operational

catalyst where industry has reported strong drilling results (pg. 3).

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(FY-Dec.) 2008A 2009A 2010E 2011E

CFPS $1.93 $0.95 $1.07 $1.4P/CFPS 11.4x 8.3

EPS $0.68 -$0.45 -$0.36 -$0.1P/E na n

CF/boe $28.02 $13.07 $14.51 $18.0EV/EBITDA 6.9x 18.9x 14.0x 10.2ROCE 7.0% -5.0% -3.0% -1.0%D/CF 1.6x 3.8x 2.7x 2.7

Quarterly CFPS Q1 Q2 Q3 Q

2008A $0.46 $0.55 $0.50 $0.42009A $0.46 $0.18 $0.12 $0.22010E $0.29 $0.20 $0.25 $0.3Dividend $0.40 Yield 3.3%Book Value $10.38 Price/Book 1.2

Shares O/S (mm) 213.0 Mkt. Cap ($mm) $2,60Float O/S (mm) 170.4 Float Cap ($mm) $2,08Wkly Vol (000s) 3,792 Wkly $ Vol (mm) $45.Net Debt ($mm) $582.1 Next Rep. Date 28-Apr (E

Notes: All values in C$; EPS (dil.), CFPS (dil.); 2008A & bkwd. areProEx; 2009E & fwd. are newco PRQMajor Shareholders: CPPIB (13%)First Call Mean Estimates: PROGRESS ENERGY RESOURCESCORP (C$/CF) 2010E: $1.29; 2011E: $1.54

Changes Annual EPS Annual CFPS Quarterly CFPS2010E-$0.34to-$0.36 2010E$1.10to$1.07 Q1/10E$0.33to$0.29

Q3/10E$0.26to$0.25Q4/10E$0.31to$0.33


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United Company RUSAL(486HK-HKSE)


April 13, 2010Research CommentToronto, Ontario

Tony RobsonBMO Nesbitt Burns Inc.(416) [email protected]: Jessica Fung

Price (12-Apr) HKD9.48 52-Week High HKD10.1Target Price HKD9.50 52-Week Low HKD7.3CORRECTION: Target Price Raised to HK$9.50; 2009

Results Slightly Better Than Expected

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United Company RUSAL(HK_486)Price: High,Low,Close

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Event

We are issuing this correction to properly reflect the discount to NAV our target

price represents. UC RUSAL reported 2009 underlying net losses of US$397M

or (US$0.03/share), better than BMO Research estimates. Net debt at the end of

2009 was US$13.6B; BMO estimates net debt stood at US$12.9B post IPO.


Impact

Slightly positive. Earnings results were in line and net debt levels were lower

than expected by BMO Research. For investors the company continues to be

relatively high risk as cash flow is swept to pay down debt, with little available

for project expenditures. On base case assumptions, BMO estimates the

company would be in a net cash position by 2015.

Forecasts

BMO estimates EPS of US$0.10 in 2010 and US$0.14 in 2011, basically

unchanged. RUSAL continues to guide to a 3% increase in aluminum production

in 2010 over 2009, which BMO estimates at 4.1Mt. Alumina production is now

expected to increase by 11% over 2009 levels, higher than previous guidance of

7% due to increased restarts in production across the board.

Valuation

RUSALs estimated NPV increased by 11% to HK$15.75/share

(US$2.03/share) from HK$14.16/share (US$1.82/share). The valuation increase

is mainly due to an increase in value of RUSALs 25% interest in NorilskNickel, which currently represents approximately 21% of RUSALs gross NPV.

The HK$9.50 target price represents 0.6x NPV.

Recommendation

UC RUSAL is rated Market Perform. The companys large, low-cost operations

remain offset by its high debt position and risky corporate structure.

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Feb Mar Apr2010

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(FY-Dec.) 2009A 2010E 2011E 2012E

EPS - $0.03 $0.10 $0.14 $0.2P/E 11.9x 9.0x 5.9

CFPS $0.01 $0.15 $0.18 $0.2P/CFPS 8.1x 6.7x 4.7

EV/EBITDA 22.4x 9.2x 7.6x 5.2Aluminum(US$/lb) $0.76 $0.95 $1.00 $1.1Alumina(US$/t) $236 $275 $291 $32R

UB/US$ 31.76 30.00 32.40 34.9

Quarterly EPS H1 H

2009A -$0.07 $0.02010E $0.05 $0.02011E $0.07 $0.0


Shares O/S (mm) 15,136.0 Mkt. Cap (mm) HKD142,27Float O/S (mm) 15,136.0 Float Cap (mm) HKD142,27Wkly Vol (000s) 100,457 Wkly HKD Vol (mm) 47.Net Debt ($mm) $12,900 Next Rep. Date Jul (E

Notes: Share price, market cap. & weekly vol. in HK$, all othervalues in US$Major Shareholders: EN+ Group (47.6%), SUAL (15.9%), Onexim(17.1%), Glencore (8.7%)First Call Mean Estimates: Not Available

Changes Annual EPS Annual CFPS Quarterly EPS Target 2010E$0.11to$0.10 2012E$0.25to$0.26 Q2/10E$0.06to$0.05 HKD9.00toHKD9.50


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Cascades Inc.(CAS-TSX)

Stock Rating: OutperformIndustry Rating: Outperform

April 14, 2010Research CommentMontreal, Quebec

Stephen AtkinsonBMO Nesbitt Burns Inc.(514) [email protected]: Joe Licursi, CMA / David Guenette

Price (13-Apr) $8.12 52-Week High $9.8Target Price $13.50 52-Week Low $2.7Estimates Revised

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Cascades Inc. (CAS)

Price: High,Low,Close Earnings/Share


Event

We are slightly lowering our Cascades estimates to reflect delays in the

implementation of the European and North American price increases.

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Impact

Neutral.

Forecasts

Packaging continues to be one of our preferred commodities. U.S. boxplant

plus mill inventories fell 97,000 tons in February to a record low 2.123mm tons.

The 10-year average drop in February inventory is 9,000 tons. Year-to-date

demand is up 2% and linerboard exports accounted for 28% of U.S. production.

The US$50/ton price increase is being implemented and contrary to consensus,

we expect the US$60/ton April price increase will hold. We are in line with

2010 estimates (we have also assumed higher wastepaper costs in 2010) but

well above the 2011 First Call Mean.

Valuation

The stock is one of the more inexpensive we follow (currently trading at 4.5x

2011E EV/EBITDA). Our target price of $13.50 represents a relatively low 5.5x

2011E EV/EBITDA.

Recommendation

As of December 31, 2009, liquidity was $540mm mostly comprised of availablelines of credit. We expect Cascades to generate about $254mm in free cash flow

over the next two years. Packaging fundamentals are strong. The main risk to

our forecast is higher wastepaper costs both in packaging (OCC) and in tissue

(SOP-Sorted Office Papers). Our rating is Outperform.

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(FY-Dec.) 2008A 2009A 2010E 2011E

EPS -$0.02 $1.12 $0.78 $1.26P/E 10.7x 6.4

CFPS $1.57 $3.09 $2.91 $3.3P/CFPS 2.8x 2.4

EV/EBITDA 8.5x 5.0x 5.3x 4.3ROE nm 9% 6% 9%Gross Margin 8% 12% 10% 12%FCF -$83 $166 $119 $13

Quarterly EPS Q1 Q2 Q3 Q

2008A -$0.09 -$0.11 $0.06 $0.12009A $0.21 $0.28 $0.36 $0.22010E $0.07 $0.12 $0.31 $0.2


Shares O/S (mm) 97.7 Mkt. Cap ($mm) $79Float O/S (mm) 72.8 Float Cap ($mm) $59Wkly Vol (000s) 1,348 Wkly $ Vol (mm) $9.Net Debt ($mm) $1,533.0 Next Rep. Date April (E

Notes: All values in C$Major Shareholders: Bernard Lemaire (13.91%); Laurent Lemaire(11.5%)First Call Mean Estimates: CASCADES INCORPORATED (C$)2010E: $0.77; 2011E: $0.97

Changes Annual EPS Annual CFPS Quarterly EPS2010E$0.81to$0.78 2010E$2.94to$2.91 Q1/10E$0.15to$0.072011E$1.32to$1.26 2011E$3.40to$3.34 Q2/10E$0.15to$0.12

Q3/10E$0.23to$0.31


8/14

Page 1

Toys & Juvenile Products

Industry Rating: Outperform

April 14, 20

Gerrick L. Johnson, CM

BMO Capital Markets [email protected]

1Q10 Preview: Toys & Juvenile Products StillPerforming Well

Summary

We are still bullish on stocks in the toy and

juvenile products space.

We believe the toy and juvenile products

industries are outperforming other segments of

the consumer economy.

We anticipate that most companies in our

coverage will exceed Street EPS expectations.

An earlier Easter may have benefitted the

companies we cover.

The Easter shift should provide marginal benefit

to manufacturers with a bigger impact for

companies with retail operations (CRI, BBW,

MATs American Girl).

Retail inventories remain lean and input costs are

significantly higher on a year-over-year basis,

which could cause some concern for investors.

We expect companies under coverage to again

exhibit good operating cost control.

Our favorite names in the space continue to be

MAT, CRI, and LF.

Toy & Juvenile Product stocks have had a very good run, outperforming the

broader market so far in 2010. We are still bullish on these child-facing

industries. We believe that the toy and juvenile products industries are

performing better than other sectors of the consumer economy, particularly

those of other discretionary consumer products. We think these companieswill continue to generate better-than-expected financial results through 2010,

and we believe these stocks will continue to outperform the market over the

next 12 months.

While we are looking for the companies we cover to report 1Q10 sales and

earnings that generally exceed current Street expectations, we are mindful of

current valuations (~12.5x for the group, which is pushing past the historical

average) and the recent appreciation of these stocks (+23% ytd vs +7% for

S&P 500). Should concerns arise on conference calls, or profit-taking occur,

triggering sell-offs in these stocks, we would likely consider such sell-offs as

buying opportunities.

Some commentary that could concern investors, despite strong numbers and

good consumer demand, could be regarding retail inventories and input

costs. We think retail inventories remain lean, and those who are anticipating

big shipments to replenish depleted inventories at retail may come away

disappointed. Also, key input costs like resin, paper, and zinc are showing

sizable year-over-year increases and could begin to flow through cost of

good sold over the next several quarters, giving rise to gross margin

compression warnings, despite strong cost controls.

13-Apr EPS P/E Mkt CapToys Rating Price Target 2009E 2010E 2011E 2009E 2010E 2011E Div Yld Book ($mm

Build-A-Bear Workshop (BBW) Outperform $7.31 $6 -$0.16 $0.30 $0.50 nm 24.4 14.6 $0.00 0.0% $8.03 149Carter's (CRI) Outperform $31.73 $35 $2.15 $2.43 $2.70 14.8 13.1 11.8 $0.00 0.0% $9.57 1,868Hasbro (HAS) Market Perform $39.31 $34 $2.48 $2.45 $2.75 15.9 16.0 14.3 $1.00 2.5% $11.63 5,361JAKKS Pacific (JAKK) Market Perform $14.41 $13 $1.04 $1.15 $1.30 13.9 12.5 11.1 $0.00 0.0% $13.09 402LeapFrog (LF) Outperform $6.50 $7 -$0.04 $0.45 $0.60 nm 14.4 10.8 $0.00 0.0% $2.50 416Mattel (MAT) Outperform $23.46 $27 $1.37 $1.55 $1.80 17.1 15.1 13.0 $0.75 3.2% $6.99 8,531Mega Brands (MB) Market Perform $0.44 $0 na na na na na na $0.00 0.0% -$8.12 16RC2 (RCRC) Market Perform $16.17 $15 $1.39 $1.35 $1.45 11.6 12.0 11.2 $0.00 0.0% $11.01 346

Source: BMO Capital Markets estimates and company reports.

April 14, 20



9/14


Electronics for Imaging(EFII-OTC)


April 13, 20

Enterprise Hardware & Imagin

Keith Bachm

BMO Capital Markets Co212-885-40

[email protected]

Corey Meehan Jung Pa212-885-4026 213-228-25

[email protected] [email protected]

Securities InfoPrice (13-Apr) $12.04 Target Price $152-Wk High/Low $14/$9 Dividend Mkt Cap (mm) $540 Yield Shs O/S (mm, BASIC) 44.9 Float O/S (mm) 4Options O/S (mm) na ADVol (30-day, 000s)

Price Performance

Better, In the Stock

Event

We attended a large international sign expo last week that made us more

confident on EFIs inkjet business. We believe end-user demand is

improving, which should be a near-term positive for ink sales. However, we

believe hesitancy toward large printer purchases remains.

60

80

100

120

140

160

ELECTRONICS FOR IMAGING INC (EFII)Price: High,Lo w, Close( US$) Relative to S&P 500

5

10

15

20

25

30

ImpactPositive We are increasing our CY2010 and CY2011 revenue and EPS

estimates based on better-than-expected end-user demand. For the March

quarter, we believe our $106.5 million revenue and roughly break-even EPS

estimates are reasonable and expect any upside to revenues to come from

stronger-than-expected ink sales.0

20

40

0

20

40


2005 2006 2007 2008 2009

Volume (mln)



(FY-Dec.) 2008A 2009A 2010E 2011

EPS Pro Forma $0.73 -$0.22 $0.34 $0.6P/E 35.4x 18.0First Call Cons. $0.34 $0.72

EPS GAAP -$0.24 -$0.07 -$0.73 -$0.2

FCF $0.28 -$0.57 $0.25 $0.6P/FCF 48.2x 20.1EBITDA ($mm) $83 $12 $40 $5EV/EBITDA 5.7x 3.9Rev. ($mm) $560 $401 $470 $52

EV/Rev 0.5x 0.4


ForecastsFor CY2010, we are increasing our EPS estimate to $0.34 from $0.32

(consensus - $0.33). For CY2011, we are increasing our EPS estimate to

$0.67 from $0.63 (consensus - $0.72).

ValuationWe are increasing our target price to $12.50 from $12, which is based off

11x-12x our CY2011 EPS estimate, minus interest income, plus cash.

2009A -$0.08 -$0.12 -$0.05 $0.02010E $0.00 $0.05 $0.09 $0.1

Balance Sheet Data (12/31/09)

Net Debt ($mm) -$310 TotalDebt/EBITDA nmTotal Debt ($mm) -$240 EBITDA/IntExp nNet Debt/Cap. nm Price/Book 1.0



Recommendation

We remain MARKET PERFORM rated. We believe a healthy recovery ofinkjet sales is already priced into the stock. We do not see enough earnings

growth to move EFI materially higher from its current levels.

Changes Annual EPS Annual FCF Quarterly EPS Target 2010E$0.32to$0.34 2010E$0.04to$0.25 Q4/10E$0.18to$0.19 $12.00to$12.50

2011E$0.63to$0.67 2011E$0.30to$0.60


10/14


Qualcomm(QCOM-NASDAQ)


April 13, 20

Communications Equipme

Tim Lo


[email protected]

Kevin Manning Ari Kle212-885-4102 212-885-41

[email protected] [email protected]

Securities InfoPrice (13-Apr) $42.30 Target Price $52-Wk High/Low $50/$35 Dividend $0Mkt Cap (mm) $71,089 Yield 1.Shs O/S (mm, BASIC) 1,681 Float O/S (mm) 1,6Options O/S (mm) na ADVol (30-day, 000s) 25,7

Price Performance

Tweaking Numbers Ahead of Quarter; ExpectConservative Guidance

Event

We are raising our numbers slightly as we wrap up the handset market

following Q1. We believe CDMA/WCDMA units were better than we had

expected and ASP pressure has stabilized. We raise our March estimates

within the pre-announced range, but our higher numbers for June are a penny

below consensus. In general, we believe the device unit environment is

positive and ASPs are stabilizing. We are expecting a strong second half of

2010, with MSM growth accelerating, and device units potentially coming in

above guidance. We believe management may begin to provide less clarity,

particularly for ASPs, which may be an issue for some investors.

80

90

100

110

120

130

140

150

160

170

QUALCOMM INC (QCOM)Price: High, Low,Close(US$) Relati ve to S&P 500

15

20

25

30

35

40

45

50

55

60

0

500

1000

0

500

100


ImpactNeutral. We believe QCOM will speak more positively about device

volumes, which should quell some of the ASP concerns. We maintain our

OUTPERFORM rating despite the fact that June-quarter guidance may fall

below current consensus.

2005 20 06 2007 2008 2009

Volume (mln)



(FY-Sep.) 2008A 2009A 2010E 2011E

EPS Pro Forma $2.25 $1.90 $2.29 $2.5P/E 18.5x 16.4First Call Cons. $2.30 $2.5

EPS GAAP $1.85 $1.47 $1.82 $1.8

FCF $1.30 $3.85 $2.10 $2.2P/FCF 20.1x 19.0EBITDA ($mm) $4,603 $4,166 $4,236 $4,90EV/EBITDA 21.3x 18.3Rev. ($mm) $11,130 $10,385 $10,635 $11,74EV/Rev 8.5x 7.7


ForecastsWe are raising our FY2010/2011 pro forma EPS estimates from $2.24/$2.55

to $2.29/$2.58

2009A $0.31 $0.41 $0.54 $0.62010E $0.62A $0.57 $0.52 $0.56

Balance Sheet Data (12/31/09)

Net Debt ($mm) $18,928 TotalDebt/EBITDA 0.0Total Debt ($mm) $199 EBITDA/IntExp nNet Debt/Cap. 92.3% Price/Book 3.3



Valuation

Our price target of $54 assumes that the stock trades at 20x our pro formaEPS estimate for CY2011

Recommendation

We rate QCOM OUTPERFORM.

Changes Annual EPS Annual FCF Quarterly EPS2010E$2.24to$2.29 2010E$1.85to$2.10 Q2/10E$0.55to$0.572011E$2.55to$2.58 2011E$1.88to$2.23


11/14

Page 1 April 13, 20

Communications

Equipment

Industry Rating: Market Perform

April 13, 20

Tim Lon

BMO Capital Markets [email protected]

Kevin Manning Ari Kle212-885-4102 [email protected] [email protected]

Summary

We expect solid results from the handset segment in the

March quarter, likely beating our better-than-seasonal

estimate. Our global model calls for 345.5M units

(including white box), down 9.3% Q/Q and up 28.5%

Y/Y. We think seasonality is becoming less of a factor

as emerging markets have grown.

We are modeling a typical 2Q, with units up 3.6% Q/Q

to 358M phones.

We expect most of our companies to report March-

quarter results around consensus. Guidance should be

more mixed as the industry has become more

competitive.

We have an OUTPERFORM rating on QCOM. They

preannounced positively, and we raised our estimatestoday based on positive WCDMA/CDMA checks for the

March quarter.

We have MARKET PERFORM ratings on NOK, MOT,

ERIC, NVTL, and SWIR. We need to see signs of high-

end Smartphones and improved OS from NOK, more

Android devices for MOT and are concerned about

integration and the infrastructure market for ERIC. We

have a longer-term downward basis for both SWIR and

NVTL owing to competitive issues.

Wireless Earnings PreviewWe expect a decent quarter for the handset space, with overall industry units

likely beating our better than seasonal 9% Q/Q decrease. QCOM and RIMM

are our only positive ratings in wireless.

QUALCOMM reports on 4/21. QCOM recently provided positive

EPS and revenue guidance, although it did not update units and

ASP estimates. Today, we raised our QCOM estimates owing to

positive checks on March-quarter WCDMA/CDMA units and ASPs

(see our separate QCOM note). We rate QCOM OUTPERFORM.

Nokia reports on 4/22. We believe units could beat our estimate for

the quarter at the low end, but dont see the potential for a recovery

until Smartphone strategy improves, likely now not until 3Q. We

rate NOK MARKET PERFORM.

Sony Ericsson reports on 4/16 and Ericsson on 4/23. SEMC andST-Ericsson should continue to adversely affect results. We rate the

shares MARKET PERFORM.

Motorola reports on 4/29. Focus should be on handset results and

Android units, ASPs, margins, device launches and the spinoff. We

rate MOT MARKET PERFORM.

Sierra Wireless is expected to reports the week of 5/3. We are in

line with consensus for 4Q. We are below consensus for 2Q as we

expect greater competition and margin pressure to negatively affect

results. We rate SWIR MARKET PERFORM.

Novatel Wireless is expected to reports the week of 5/10. Webelieve results will be in line with consensus. Our 2Q estimates are

below consensus. We rate NVTL MARKET PERFORM.



12/14


Intel(INTC-NASDAQ)


April 14, 20

Semiconducto

Ambrish Srivastava, Ph


[email protected]

Emily Scudd415-591-21

[email protected]

Not Your Fathers Intel Securities InfoPrice (13-Apr) $22.76 Target Price $252-Wk High/Low $23/$15 Dividend $0Mkt Cap (mm) $125,726 Yield 2.Shs O/S (mm, BASIC) 5,524 Float O/S (mm) 5,Options O/S (mm) na ADVol (30-day, 000s) 53,8

Selected Bond Iss

Event

Margins are not collapsing, and appear to be headed higher. And boy, it is

nice to not ask for a multiple expansion on a stock for it to work. Inteldelivered very strong results for 1Q with guidance slightly better than

seasonal. 1Q EPS came in at $0.43 vs. our $0.36 estimate and revenues were

$10.3 billion vs. $9.7 billion, down 3% q-q, better than seasonal aided

largely by sequentially better ASPs.


ImpactQuite positive. The bears on INTC would have you sell the stock the moment

margins hit 60%, which was in 4Q09. Our investment case for INTC has

been predicated on our view that the company can sustain margins in the

60%'s longer, given a reduced cost structure and better mix. Intel is

delivering on that front, and then some, in our view. Margins for the year arenow expected to be at 64% vs. prior guidance of 61%. Inventory appears lean

as well, including on Intels balance sheet, where inventory stayed essentially

flat. On the top-line front, Intel is showing some early signs of a corporate

recovery in its non-server business.

ForecastsOur 2011 estimates get pulled in to 2010. We are raising 2010 to $1.85 vs.

$1.70 (consensus $1.68) and 2011 goes to $2.00 vs. $1.85 (consensus $1.83).

Valuation

We are raising our price target to $28 from $26 based on a P/E multiple of

14x our 2011 EPS estimate of $2.00.

Recommendation

We rate INTC shares OUTPERFORM.

Changes Annual EPS Annual FCF Quarterly EPS Target 2010E$1.70to$1.85 2010E$2.01to$1.87 Q2/10E$0.38to$0.42 $26.00to$28.00

2011E$1.85to$2.00 2011E$1.96to$2.11 Q3/10E$0.46to$0.47Q4/10E$0.50to$0.52

Ind Prc Ratg Mdys/S&P YTW SpreINTC 2.95% '35 99 na / A- 3.01% -169

INTC 3.25 '39 121 A2 / A- 2.24% -246Bond data from Bloomberg.

Price Performance

60

70

80

90

100

110

120

INTEL CORP (INTC)

Price: High, Low,Close(US$) Rel at ive to S&P 500

10

15

20

25

30

0

1000

2000

3000

0

10

20

30

2005 2006 2007 2008 20 09

Volume (mln)



(FY-Dec.) 2008A 2009A 2010E 2011E

EPS GAAP $0.92 $0.78 $1.85 $2.0P/E 12.3x 11.4First Call Cons. $1.68 $1.8

FCF $1.00 $1.18 $1.87 $2.1P/FCF 12.2x 10.8EBITDA ($mm) $14,276 $13,691 $19,784 $21,20EV/EBITDA 5.7x 5.3Rev. ($mm) $37,586 $35,127 $43,091 $45,99EV/Rev 2.6x 2.5


2009A $0.11 -$0.07 $0.33 $0.42010E $0.43A $0.42 $0.47 $0.52

Balance Sheet Data (12/31/09)Net Debt ($mm) -$12,472 TotalDebt/EBITDA 0.1Total Debt ($mm) $2,221 EBITDA/IntExp nNet Debt/Cap. nm Price/Book 3.0




13/14

Important DisclosuresAnalyst's Certification

As to each company covered in this report, the analyst hereby certifies that the views expressed in this report accurately reflect my personal views aboutthe subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specificrecommendations or views expressed in this report.

Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their

affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generatingnew ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients.

Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Ltd. are not registered as research analysts with FINRA. These analystsmay not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the NASD Rule 2711 and NYSE Rule 472

restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

Company Specific Disclosures

For Important Disclosures on the stocks discussed in this report, please go http://researchglobal.bmocapitalmarkets.com/Company_Disclosure_Public.asp.

Distribution of Ratings (Dec. 31, 2009)

Rating

Category BMO Rating

BMOCM US

Universe*

BMOCM US

IB Clients**

BMOCM US

IB Clients***

BMOCM

Universe****

BMOCM

IB Clients*****

First Call

Universe

Buy Outperform 32.2% 12.3% 38.3% 36.1% 47.9% 50%

Hold Market Perform 62.6% 10.2% 61.7% 56.9% 48.9% 43%

Sell Underperform 5.3% 0% 0% 6.9% 3.2% 7%

* Reflects rating distribution of all companies covered by BMO Capital Markets Corp. equity research analysts.** Reflects rating distribution of all companies from which BMO Capital Markets Corp. has received compensation for Investment Banking services a

percentage within ratings category.*** Reflects rating distribution of all companies from which BMO Capital Markets Corp. has received compensation for Investment Banking

services as percentage of Investment Banking clients.**** Reflects rating distribution of all companies covered by BMO Capital Markets equity research analysts.***** Reflects rating distribution of all companies from which BMO Capital Markets has received compensation for Investment Banking services as

percentage of Investment Banking clients.

Ratings and Sector Key

We use the following ratings system definitions:OP = Outperform - Forecast to outperform the market;

Mkt = Market Perform - Forecast to perform roughly in line with the market;Und = Underperform - Forecast to underperform the market;(S) = speculative investment;NR = No rating at this time;

R = Restricted Dissemination of research is currently restricted.

Market performance is measured by a benchmark index such as the S&P/TSX Composite Index, S&P 500, Nasdaq Composite, as appropriate for eachcompany. BMO Capital Markets eight Top 15 lists guide investors to our best ideas according to different objectives (Canadian large, small, growth,value, income, quantitative; and US large, US small) have replaced the Top Pick rating.

Other Important Disclosures

For Other Important Disclosures on the stocks discussed in this report, please go to http://researchglobal.bmocapitalmarkets.com/Company_Disclosure_Public.asp or write to Editorial Department, BMO Capital Markets, 3 Times Square, New York, NY 10036 or Editorial Department, BMO CapitaMarkets, 1 First Canadian Place, Toronto, Ontario, M5X 1H3.

Prior BMO Capital Markets Ratings Systems

http://researchglobal.bmocapitalmarkets.com/documents/2009/prior_rating_systems.pdf

Dissemination of Research

Our research publications are available via our web site http://bmocapitalmarkets.com/research/. Institutional clients may also receive our research viaFIRST CALL, FIRST CALL Research Direct, Reuters, Bloomberg, FactSet, Capital IQ, and TheMarkets.com. All of our research is made widely

available at the same time to all BMO Capital Markets client groups entitled to our research. Additional dissemination may occur via email or regularmail. Please contact your investment advisor or institutional salesperson for more information.

Conflict Statement

A general description of how BMO Financial Group identifies and manages conflicts of interest is contained in our public facing policy for managing

conflicts of interest in connection with investment research which is available at http://researchglobal.bmocapitalmarkets.com/Conflict_Statement_Public.asp.

General Disclaimer

BMO Capital Markets is a trade name used by the BMO Investment Banking Group, which includes the wholesale arm of Bank of Montreal and its

subsidiaries BMO Nesbitt Burns Inc. and BMO Nesbitt Burns Lte./Ltd., BMO Capital Markets Ltd. in the U.K. and BMO Capital Markets Corp. in theU.S. BMO Nesbitt Burns Inc., BMO Capital Markets Ltd. and BMO Capital Markets Corp are affiliates. Bank of Montreal or its subsidiaries (BMO


14/14

BMO Capital Markets

Financial Group) has lending arrangements with, or provide other remunerated services to, many issuers covered by BMO Capital Markets. The

opinions, estimates and projections contained in this report are those of BMO Capital Markets as of the date of this report and are subject to changewithout notice. BMO Capital Markets endeavours to ensure that the contents have been compiled or derived from sources that we believe are reliableand contain information and opinions that are accurate and complete. However, BMO Capital Markets makes no representation or warranty, express or

implied, in respect thereof, takes no responsibility for any errors and omissions contained herein and accepts no liability whatsoever for any loss arisingfrom any use of, or reliance on, this report or its contents. Information may be available to BMO Capital Markets or its affiliates that is not reflected inthis report. The information in this report is not intended to be used as the primary basis of investment decisions, and because of individual clienobjectives, should not be construed as advice designed to meet the particular investment needs of any investor. This material is for information purposes

only and is not an offer to sell or the solicitation of an offer to buy any security. BMO Capital Markets or its affiliates will buy from or sell to customer

the securities of issuers mentioned in this report on a principal basis. BMO Capital Markets or its affiliates, officers, directors or employees have a longor short position in many of the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon. Thereader should assume that BMO Capital Markets or its affiliates may have a conflict of interest and should not rely solely on this report in evaluating

whether or not to buy or sell securities of issuers discussed herein.

Additional Matters

To Canadian Residents: BMO Nesbitt Burns Inc. and BMO Nesbitt Burns Ltee/Ltd., affiliates of BMO Capital Markets Corp., furnish this report toCanadian residents and accept responsibility for the contents herein subject to the terms set out above. Any Canadian person wishing to effect

transactions in any of the securities included in this report should do so through BMO Nesbitt Burns Inc. and/or BMO Nesbitt Burns Ltee/Ltd.

To U.S. Residents: BMO Capital Markets Corp. and/or BMO Nesbitt Burns Securities Ltd., affiliates of BMO NB, furnish this report to U.S. resident

and accept responsibility for the contents herein, except to the extent that it refers to securities of Bank of Montreal. Any U.S. person wishing to effectransactions in any security discussed herein should do so through BMO Capital Markets Corp. and/or BMO Nesbitt Burns Securities Ltd.

To U.K. Residents: In the UK this document is published by BMO Capital Markets Limited which is authorised and regulated by the FinanciaServices Authority. The contents hereof are intended solely for the use of, and may only be issued or passed on to, (I) persons who have professiona

experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order2005 (the Order) or (II) high net worth entities falling within Article 49(2)(a) to (d) of the Order (all such persons together referred to as relevantpersons). The contents hereof are not intended for the use of and may not be issued or passed on to, retail clients.

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served through Harris N.A. Investment and corporate banking services are provided in Canada and the US through BMO Capital Markets.BMO Capital Markets is a trade name used by BMO Financial Group for the wholesale banking businesses of Bank of Montreal, Harris N.A. and BMOIreland Plc, and the institutional broker dealer businesses of BMO Capital Markets Corp. (Member SIPC), BMO Nesbitt Burns Trading Corp. and BMOCapital Markets GKST Inc. (Member SIPC) in the U.S., BMO Nesbitt Burns Inc. (Member CIPF) in Canada, Europe and Asia, BMO Nesbitt Burns SecuritieLimited (U.S. registered and member of FINRA), and BMO Nesbitt Burns Lte/Ltd. (Member CIPF) in Canada, and BMO Capital Markets Limited in Europand Australia. Nesbitt Burns is a registered trademark of BMO Nesbitt Burns Corporation Limited, used under license. BMO Capital Markets istrademark of Bank of Montreal, used under license. "BMO (M-Bar roundel symbol)" is a registered trademark of Bank of Montreal, used under license.

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