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April 14, 2010

TODAY'S HIGHLIGHTS

U.S. Canadian / Int'l

Estimates/Targets Raised Electronics for Imaging United Company RUSAL


Qualcomm
Intel
Estimates/Targets Lowered Westamerica Bancorp Progress Energy Resources
Cascades
Sector Revisions
Toys & 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
April 14, 2010
TD Bank Research Comment
Toronto, Ontario
(TD-TSX; TD-NYSE)

Stock Rating: Outperform


John Reucassel, CFA
Industry Rating: Market Perform
BMO Nesbitt Burns Inc.
Member of: Top 15 Large Cap Stock Selections (416) 359-4379
Top 15 Income Stock Selections John.Reucassel@bmo.com
Assoc: John Fong, CFA, FSA
Top 15 Quantitative Stock Selections

Price (13-Apr) $74.62 52-Week High $76.91


Target Price $80.00  52-Week Low $45.82
Investor Day – Focus on Wealth Management Toronto-Dominion Bank (TD)
Price: High,Low,Close Earnings/Share
6.5
80
6.0
Event 70
5.5
TD Bank Financial Group hosted an investor day highlighting its wealth 60
5.0

management operations excluding TD Ameritrade. 50 4.5


40 4.0

Impact 30
Volume (mln)
3.5

100 100
Positive. We have argued for over 10 years that that the long-term competitive
50 50
advantage in Canadian wealth management will be driven by distribution. By 0 0
this metric, TD, through its 1,000-branch network and over 1,400 advisors as 120
TD Relative to S&P/TSX Comp
120

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


100 100
to grow its share of mutual fund, high net worth and institutional businesses.
80 80
Harvesting TD’s deep retail deposit base should also provide a steady source of 2005 2006 2007 2008 2009
Last Data Point: April 12, 2010
net flows. Rebounding equity markets should sustain strong earnings growth
(FY-Oct.) 2008A 2009A 2010E 2011E
through 2010 and 2011 in this segment. EPS - Cash $5.39 $4.19 $5.70 $6.55
P/E 13.1x 11.4x

Forecasts EPS - GAAP $5.00 $3.61 $5.14 $5.99


P/E 14.5x 12.5x
No change.
Cash ROE 16.2% 14.2% 14.8% 15.8%
Specific Prov. ($mm)$1,063 $2,016 $2,172 $1,285
Dividend $2.36 $2.44 $2.44 $2.44
Valuation Tier One Capital 9.8% 11.3% 11.6% 12.3%
Our $80 target price represents 12.2x our 2011E cash EPS estimate. Quarterly EPS - Cash Q1 Q2 Q3 Q4
2008A $1.42 $1.24 $1.34 $1.38
2009A $0.96 $0.82 $1.16 $1.25
Recommendation 2010E $1.57a $1.37 $1.37 $1.39

TD remains rated Outperform. In addition to rising equity markets, spreads in Dividend $2.44 Yield 3.3%
Book Value $41.86 Price/Book 1.8x
wealth management should rise with higher short-term rates. If spreads widened Shares O/S (mm) 862.0 Mkt. Cap ($mm) $64,322
Float O/S (mm) 862.0 Float Cap ($mm) $64,322
by 100 basis points (i.e., back to spreads achieved in 2007), NII in the wealth Wkly Vol (000s) 17,043 Wkly $ Vol (mm) $1,037.6
management segment could rise up to $140mm annually. Overall, a positive Net Debt ($mm) na Next Rep. Date 27-May (E)
Notes: All values in C$; EPS fd; CEPS add back amort. of intang. &
tone to the presentation, which highlighted that even in the face of declining goodwill; 2006 EPS ex. gain on AMTD & other
domestic loan growth in 2010 and 2011, TD has growth opportunities in other Major Shareholders: Widely held
First Call Mean Estimates: TORONTO-DOMINION BANK (C$)
segments. 2010E: $5.83; 2011E: $6.68

This report was prepared by an analyst(s) employed by BMO Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s) under
FINRA rules. For disclosure statements, including the Analyst's Certification, please refer to pages 5 to 8.
April 13, 2010

Westamerica Bancorp Banks


(WABC-OTC)
Lana Chan Peter J. Winter
BMO Capital Markets Corp. BMO Capital Markets Corp.
Stock Rating: Market Perform 212-885-4109 212-885-4108
Industry Rating: Market Perform lana.chan@bmo.com peter.winter@bmo.com

Jonathan Katz Virginia Chiarello


212-885-4066 212-885-4119
jonathan.katz@bmo.com virginia.chiarello@bmo.com

Solid 1Q Results, But Growth is Challenging Securities Info


Price (13-Apr) $58.67 Target Price $50 
52-Wk High/Low $61/$45 Dividend $1.44
Mkt Cap (mm) $1,715 Yield 2.5%
Event Shs O/S (mm, BASIC) 29.2 Float O/S (mm) 28.1
Options O/S (mm) na ADVol (30-day, 000s) 148
WABC reported 1Q10 EPS of $0.80 versus $0.76 a year ago. This was in Price Performance
line with our estimate and a penny above consensus. WESTAMERICA BANCORPORATION (WABC)
P ric e: High, Low,Close(US$) Relati ve to S &P 500
1 50

80 1 40
Impact 1 30
70
The results were solid, driven by net interest margin expansion, good 1 20

1 10
60
expense control, and stable credit quality trends. The key challenge, 1 00

however, remains balance sheet growth as both loans and deposits declined 50 90

80
sequentially. There is also some revenue risk from legislation on NSF fees, 40
70

although an economic recovery would benefit other fee income lines. WABC 30
Volum e (mln)
60

15 15
sports strong capital ratios, positioning it well for acquisitions.
10 10

5 5

Forecasts 0
20 05 20 06 20 07 20 08 200 9
Las t Dat a P oint: A pril 12, 2010
0

We are lowering our EPS estimates to $3.22 (from $3.35) for 2010 and to Valuation/Financial Data
$3.40 (from $3.65) for 2011. This reflects further contraction in loan (FY-Dec.) 2009A 2010E 2011E 2012E
volumes as demand remains weak and competition has increased. Also, we EPS Pro Forma $3.15 $3.22 $3.40 na
P/E 18.2x 17.3x na
are factoring in a decline in deposit service charges as a result of legislation First Call Cons. $3.24 $3.50 $4.05
EPS GAAP $3.15 $3.22 $3.40 na
on NSF fees. We are also lowering our fully normalized EPS estimate to
Bk Val/Share $17.31 $19.11 $21.08 na
$3.65 (from $3.70). Price/Book 3.1x 2.8x na
Tang. BV/Shr $11.92 $13.78 $15.75 na
Price/TB 4.3x 3.7x na
Valuation Quarterly EPS 1Q 2Q 3Q 4Q
2009A $0.80 $0.75 $0.81 $0.79
WABC shares are trading at 16.1x our fully normalized EPS estimate and 2010E $0.80A $0.80 $0.81 $0.81
4.7x tangible book value, versus the small-cap bank group medians of 10.5x Balance Sheet Data (31-Mar)
ROE 1.99% Exp./Revenues 44.20%
and 1.9x. ROA 18.80% Net Charge-Offs/Loans 0.65%
NPAs/Loans+OREO 1.63% Tang. Common/Assets 7.92%
Reserve/Loans 1.88%
Recommendation Notes: All values in US$.
Source: BMO Capital Markets estimates, Bloomberg, FactSet, Global
We maintain our MARKET PERFORM rating, but are adjusting our price Insight, Reuters, and Thomson Financial.
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 $3.35 to $3.22 2010E $19.22 to $19.11 Q2/10E $0.82 to $0.80 $51.00 to $50.00
2011E $3.65 to $3.40 2011E $21.42 to $21.08 Q3/10E $0.85 to $0.81
Q4/10E $0.87 to $0.81

Please refer to pages 7 to 9 for Important Disclosures, including the Analyst's Certification.
April 13, 2010

REITs Paul E. Adornato, CFA


BMO Capital Markets Corp.
212-885-4170
paul.adornato@bmo.com
Industry Rating: Market Perform
Mark Lutenski Earnest L. Swea
212-885-4197 212-885-4172
mark.lutenski@bmo.com earnest.sweat@bmo.com

Storage to Ride Apartment Bandwagon?


Summary
We believe some investors may be buying storage REITs as a derivative  We believe some investors may be buying
play on the popular notion that apartment REITs are poised to enjoy storage REITs as a derivative play on the popular
significant rent growth. However, a quick review of annual total returns for
notion that apartment REITs are poised to enjoy
apartment and storage REITs (see Exhibit 1) shows that in 7 out of 14 years,
significant rent growth. However, a quick review
the sectors diverged in performance relative to the REIT Index, meaning one
of annual total returns for apartment and storage
outperformed while the other underperformed.
REITs (Exhibit 1) shows that in 7 out of 14 years,
We think the performance of the self-storage group (up 16.1% YTD) is the sectors diverged in performance relative to
being driven largely by the belief that storage will benefit as the multifamily the REIT Index, meaning one outperformed while
markets recover. However, we think the link to storage is tenuous at best,
the other underperformed.
and argue that the opposite may be true as renters who doubled up during the
 We think the link from multifamily to storage is
recession may look to rent a standalone space again, increasing their
tenuous at best, and argue that the opposite may
personal square footage and lessening the need for storage.
be true as renters who doubled up during the
Further, storage rental rates continue to decline versus in-place rates, recession may look to rent a standalone space
implying negative same-store NOI growth for the next several quarters. again, increasing their personal square footage
Looking at year-over-year storage REIT performance versus the consumer
and lessening the need for storage.
confidence index (CCI) seems to show that storage stocks lag the CCI. Most
 Storage rents continue to decline versus in-place
recently, storage REIT performance has jumped ahead of the CCI, which
rents, implying negative same-store NOI growth
could be a reason to take profits in storage names. We still like industrials as
for the next several quarters. While usually a
a good substitute for storage and have OUTPERFORM ratings on DRE,
laggard vs. the CCI, storage REIT performance
DCT, and FPO.
has recently jumped ahead, which could be a
Included in this report is our proprietary self-storage survey, which collects
reason to take profits, in our view. We still like
rent and discount data from seven metropolitan areas. We note that the level
industrials as a good substitute for storage and
of heavy discounts is currently the highest in the six years we have
have OP ratings on DRE, DCT, and FPO.
conducted the survey. We also observed that rents continue to decline, but
 Included in this report is our proprietary self-
the rate of decrease is less than that in our two prior surveys.
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.

Page 1 April 13, 2010


April 13, 2010
Progress Energy Research Comment
Calgary, Alberta

Resources
(PRQ-TSX) Mark Leggett, CFA
(403) 515-1508
Stock Rating: Outperform Mark.Leggett@bmo.com
Assoc: Jason Chang
Industry Rating: Market Perform
Montney Drilling Success
Price (13-Apr) $12.23 52-Week High $15.29
Target Price $15.50  52-Week Low $8.52
Event
Progress Energy Resources Corp. (PRQ)
Progress announced production from the Town South development project was Price: High,Low,Close

25 25
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 20 20

wells (six to nine fracs per leg) were drilled and completed in Q1/10 ($6.5 15 15
million per well) with five-day test rates of 4 to 7 MMcf/d. Currently, there are
10 10
five horizontal wells on-stream at a combined restricted rate of 20 MMcf/d. An
5 5
additional eight to 10 horizontal wells at Town have been budgeted for 2010. Volume (mln)
40 40
Progress also drilled or recompleted successful vertical delineation wells at
20 20
Town, Kobes, Altares, Caribou, Gundy and Lily with test rates averaging 1.5 0 0
MMcf/d. An initial pilot program at Kobes has been initiated with two (0.8 net) 200
PRQ Relative to S&P/TSX Comp
200
wells to be completed in early Q3/10. Progress also expects to initiate three
100 100
additional horizontal pilot programs in 2010 as a follow-up to successful vertical
0 0
delineation drilling. A 2010 capital budget of $350 million was reiterated. 2005 2006 2007 2008 2009
Last Data Point: April 12, 2010

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


Slightly Positive. CFPS $1.93 $0.95 $1.07 $1.47
P/CFPS 11.4x 8.3x

Forecasts EPS $0.68 -$0.45 -$0.36 -$0.14


P/E na na
We have adjusted our 2010 production forecast to 40,729 boe/d (down 846
CF/boe $28.02 $13.07 $14.51 $18.01
boe/d), while our 2011 production forecast of 47,720 boe/d remains unchanged. EV/EBITDA 6.9x 18.9x 14.0x 10.2x
As such, our 2010 CFPS estimate has been slightly lowered to $1.07, while our ROCE 7.0% -5.0% -3.0% -1.0%
D/CF 1.6x 3.8x 2.7x 2.7x
2011 CFPS estimate of $1.47 is unchanged.
Quarterly CFPS Q1 Q2 Q3 Q4
Valuation 2008A
2009A
$0.46
$0.46
$0.55
$0.18
$0.50
$0.12
$0.41
$0.20
Progress trades at premium 2010E valuation multiples of 11.4x P/CFPS and 2010E $0.29 $0.20 $0.25 $0.33

14.0x EV/EBITDA. Our target price is supported by our updated sum-of-parts Dividend $0.40 Yield 3.3%
Book Value $10.38 Price/Book 1.2x
NAV analysis of $17.07 per share (AECO $5.75/Mcf). Shares O/S (mm) 213.0 Mkt. Cap ($mm) $2,605
Float O/S (mm) 170.4 Float Cap ($mm) $2,084
Recommendation Wkly Vol (000s) 3,792 Wkly $ Vol (mm) $45.0
Net Debt ($mm) $582.1 Next Rep. Date 28-Apr (E)
We continue to rate Progress shares Outperform. We look for further horizontal Notes: All values in C$; EPS (dil.), CFPS (dil.); 2008A & bkwd. are
drilling success to enhance visibility on the aerial extent of the company’s ProEx; 2009E & fwd. are newco PRQ
Major Shareholders: CPPIB (13%)
Montney acreage. The deep Nikanassin Ojay program represents an operational First Call Mean Estimates: PROGRESS ENERGY RESOURCES
CORP (C$/CF) 2010E: $1.29; 2011E: $1.54
catalyst where industry has reported strong drilling results (pg. 3).

Changes Annual EPS Annual CFPS Quarterly CFPS


2010E -$0.34 to -$0.36 2010E $1.10 to $1.07 Q1/10E $0.33 to $0.29
Q3/10E $0.26 to $0.25
Q4/10E $0.31 to $0.33

This report was prepared by an analyst(s) employed by BMO Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s) under
FINRA rules. For disclosure statements, including the Analyst's Certification, please refer to pages 5 to 8.
April 13, 2010
United Company RUSAL Research Comment
Toronto, Ontario
(486HK-HKSE)

Stock Rating: Market Perform


Tony Robson
Industry Rating: Market Perform
BMO Nesbitt Burns Inc.
(416) 359-4034
Tony.Robson@bmo.com
Assoc: Jessica Fung

Price (12-Apr) HKD9.48 52-Week High HKD10.18


CORRECTION: Target Price Raised to HK$9.50; 2009 Target Price HKD9.50 52-Week Low HKD7.37

Results Slightly Better Than Expected Price: High,Low,Close


United Company RUSAL(HK_486)
10.0 10.0

Event 9.5 9.5

9.0 9.0
We are issuing this correction to properly reflect the discount to NAV our target
8.5 8.5
price represents. UC RUSAL reported 2009 underlying net losses of US$397M
8.0 8.0
or (US$0.03/share), better than BMO Research estimates. Net debt at the end of
7.5 7.5
2009 was US$13.6B; BMO estimates net debt stood at US$12.9B post IPO.
7.0 7.0
Volume (mln)
100 100
Impact 50 50

Slightly positive. Earnings results were in line and net debt levels were lower 0 0
HK_486 Relative to S&P 500
102 102
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 100 100

for project expenditures. On base case assumptions, BMO estimates the 98 Feb Mar Apr 98
2010
company would be in a net cash position by 2015. Last Data Point: April 2, 2010

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


Forecasts EPS
P/E
- $0.03 $0.10
11.9x
$0.14
9.0x
$0.21
5.9x
BMO estimates EPS of US$0.10 in 2010 and US$0.14 in 2011, basically
CFPS $0.01 $0.15 $0.18 $0.26
unchanged. RUSAL continues to guide to a 3% increase in aluminum production P/CFPS 8.1x 6.7x 4.7x

in 2010 over 2009, which BMO estimates at 4.1Mt. Alumina production is now EV/EBITDA 22.4x 9.2x 7.6x 5.2x
Aluminum (US$/lb) $0.76 $0.95 $1.00 $1.10
expected to increase by 11% over 2009 levels, higher than previous guidance of Alumina (US$/t) $236 $275 $291 $320
7% due to increased restarts in production across the board. RUB/US$ 31.76 30.00 32.40 34.99
Quarterly EPS H1 H2
2009A -$0.07 $0.04
Valuation 2010E $0.05 $0.05
2011E $0.07 $0.07
RUSAL’s estimated NPV increased by 11% to HK$15.75/share
Dividend $0.00 Yield 0.0%
(US$2.03/share) from HK$14.16/share (US$1.82/share). The valuation increase Book Value $0.47 Price/Book 2.6x
is mainly due to an increase in value of RUSAL’s 25% interest in Norilsk Shares O/S (mm) 15,136.0 Mkt. Cap (mm) HKD142,278
Float O/S (mm) 15,136.0 Float Cap (mm) HKD142,278
Nickel, which currently represents approximately 21% of RUSAL’s gross NPV. Wkly Vol (000s) 100,457 Wkly HKD Vol (mm) 47.1
Net Debt ($mm) $12,900 Next Rep. Date Jul (E)
The HK$9.50 target price represents 0.6x NPV.
Notes: Share price, market cap. & weekly vol. in HK$, all other
values in US$
Major Shareholders: EN+ Group (47.6%), SUAL (15.9%), Onexim
Recommendation (17.1%), Glencore (8.7%)
First Call Mean Estimates: Not Available
UC RUSAL is rated Market Perform. The company’s large, low-cost operations
remain offset by its high debt position and risky corporate structure.

Changes Annual EPS Annual CFPS Quarterly EPS Target


2010E $0.11 to $0.10 2012E $0.25 to $0.26 Q2/10E $0.06 to $0.05 HKD9.00 to HKD9.50

This report was prepared by an analyst(s) employed by BMO Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s) under
FINRA rules. For disclosure statements, including the Analyst's Certification, please refer to pages 4 to 6.
April 14, 2010
Cascades Inc. Research Comment
Montreal, Quebec
(CAS-TSX)

Stock Rating: Outperform


Stephen Atkinson
Industry Rating: Outperform
BMO Nesbitt Burns Inc.
(514) 286-7309
Stephen.Atkinson@bmo.com
Assoc: Joe Licursi, CMA / David Guenette

Price (13-Apr) $8.12 52-Week High $9.80


Estimates Revised Target Price $13.50  52-Week Low $2.75
Cascades Inc. (CAS)
Price: High,Low,Close Earnings/Share
1.5

Event 15
1.0
We are slightly lowering our Cascades estimates to reflect delays in the
10
implementation of the European and North American price increases. 0.5

5 0.0

Impact
0 -0.5
Neutral. 20
Volume (mln)
20

10 10

Forecasts 0 0
CAS Relative to S&P/TSX Comp
200 200
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. 100 100

The 10-year average drop in February inventory is 9,000 tons. Year-to-date 0 0


2005 2006 2007 2008 2009
demand is up 2% and linerboard exports accounted for 28% of U.S. production. Last Data Point: April 12, 2010

The US$50/ton price increase is being implemented and contrary to consensus, (FY-Dec.) 2008A 2009A 2010E 2011E
we expect the US$60/ton April price increase will hold. We are in line with EPS -$0.02 $1.12 $0.78 $1.26
P/E 10.7x 6.4x
2010 estimates (we have also assumed higher wastepaper costs in 2010) but
CFPS $1.57 $3.09 $2.91 $3.34
well above the 2011 First Call Mean. P/CFPS 2.8x 2.4x

EV/EBITDA 8.5x 5.0x 5.3x 4.3x


Valuation ROE nm 9% 6% 9%
Gross Margin 8% 12% 10% 12%
The stock is one of the more inexpensive we follow (currently trading at 4.5x FCF -$83 $166 $119 $135

2011E EV/EBITDA). Our target price of $13.50 represents a relatively low 5.5x Quarterly EPS Q1 Q2 Q3 Q4
2008A -$0.09 -$0.11 $0.06 $0.12
2011E EV/EBITDA. 2009A $0.21 $0.28 $0.36 $0.27
2010E $0.07 $0.12 $0.31 $0.29

Recommendation Dividend
Book Value
$0.16
$13.41
Yield
Price/Book
2.0%
0.6x
As of December 31, 2009, liquidity was $540mm mostly comprised of available Shares O/S (mm) 97.7 Mkt. Cap ($mm) $793
Float O/S (mm) 72.8 Float Cap ($mm) $591
lines of credit. We expect Cascades to generate about $254mm in free cash flow Wkly Vol (000s) 1,348 Wkly $ Vol (mm) $9.0
Net Debt ($mm) $1,533.0 Next Rep. Date April (E)
over the next two years. Packaging fundamentals are strong. The main risk to
Notes: All values in C$
our forecast is higher wastepaper costs both in packaging (OCC) and in tissue Major Shareholders: Bernard Lemaire (13.91%); Laurent Lemaire
(11.5%)
(SOP-Sorted Office Papers). Our rating is Outperform. First Call Mean Estimates: CASCADES INCORPORATED (C$)
2010E: $0.77; 2011E: $0.97

Changes Annual EPS Annual CFPS Quarterly EPS


2010E $0.81 to $0.78 2010E $2.94 to $2.91 Q1/10E $0.15 to $0.07
2011E $1.32 to $1.26 2011E $3.40 to $3.34 Q2/10E $0.15 to $0.12
Q3/10E $0.23 to $0.31

This report was prepared by an analyst(s) employed by BMO Nesbitt Burns Inc., and who is (are) not registered as a research analyst(s) under
FINRA rules. For disclosure statements, including the Analyst's Certification, please refer to pages 2 to 5.
April 14, 2010
Toys & Juvenile Products Gerrick L. Johnson, CMT
BMO Capital Markets Corp.
212-883-5192
Industry Rating: Outperform gerrick.johnson@bmo.com

1Q10 Preview: Toys & Juvenile Products Still Summary


Performing Well
Toy & Juvenile Product stocks have had a very good run, outperforming the  We are still bullish on stocks in the toy and
broader market so far in 2010. We are still bullish on these child-facing juvenile products space.
industries. We believe that the toy and juvenile products industries are  We believe the toy and juvenile products
performing better than other sectors of the consumer economy, particularly industries are outperforming other segments of
those of other discretionary consumer products. We think these companies the consumer economy.
will continue to generate better-than-expected financial results through 2010,  We anticipate that most companies in our
and we believe these stocks will continue to outperform the market over the
coverage will exceed Street EPS expectations.
next 12 months.
 An earlier Easter may have benefitted the
While we are looking for the companies we cover to report 1Q10 sales and companies we cover.
earnings that generally exceed current Street expectations, we are mindful of  The Easter shift should provide marginal benefit
current valuations (~12.5x for the group, which is pushing past the historical to manufacturers with a bigger impact for
average) and the recent appreciation of these stocks (+23% ytd vs +7% for companies with retail operations (CRI, BBW,
S&P 500). Should concerns arise on conference calls, or profit-taking occur,
MAT’s American Girl).
triggering sell-offs in these stocks, we would likely consider such sell-offs as
 Retail inventories remain lean and input costs are
buying opportunities.
significantly higher on a year-over-year basis,
Some commentary that could concern investors, despite strong numbers and which could cause some concern for investors.
good consumer demand, could be regarding retail inventories and input  We expect companies under coverage to again
costs. We think retail inventories remain lean, and those who are anticipating exhibit good operating cost control.
big shipments to replenish depleted inventories at retail may come away
 Our favorite names in the space continue to be
disappointed. Also, key input costs like resin, paper, and zinc are showing
MAT, CRI, and LF.
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 Cap


Toys 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% $8.03 149
Carter's (CRI) Outperform $31.73 $35 $2.15 $2.43 $2.70 14.8 13.1 11.8 $0.00 0.0% $9.57 1,868
Hasbro (HAS) Market Perform $39.31 $34 $2.48 $2.45 $2.75 15.9 16.0 14.3 $1.00 2.5% $11.63 5,361
JAKKS Pacific (JAKK) Market Perform $14.41 $13 $1.04 $1.15 $1.30 13.9 12.5 11.1 $0.00 0.0% $13.09 402
LeapFrog (LF) Outperform $6.50 $7 -$0.04 $0.45 $0.60 nm 14.4 10.8 $0.00 0.0% $2.50 416
Mattel (MAT) Outperform $23.46 $27 $1.37 $1.55 $1.80 17.1 15.1 13.0 $0.75 3.2% $6.99 8,531
Mega Brands (MB) Market Perform $0.44 $0 na na na na na na $0.00 0.0% -$8.12 16
RC2 (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.

Refer to pages 7 to 8 for Important Disclosures, including Analyst's Certification.

Page 1 April 14, 2010


April 13, 2010

Electronics for Imaging Enterprise Hardware & Imaging


(EFII-OTC)
Keith Bachman
Stock Rating: Market Perform BMO Capital Markets Corp.
212-885-4010
Industry Rating: Market Perform keith.bachman@bmo.com
Corey Meehan Jung Pak
212-885-4026 213-228-2546
corey.meehan@bmo.com jung.pak@bmo.com

Securities Info
Better, In the Stock Pr ice (13-Apr) $12.04 Target Price $13 
52-Wk High/ Low $14/$9 Dividend --
Mk t Cap (mm) $540 Yield --
Shs O/S (mm, BASIC) 44.9 Float O/S (mm) 44. 4
Event Options O/S (mm) na ADVol (30-day, 000s) 128

We attended a large international sign expo last week that made us more Price Performance
confident on EFI’s inkjet business. We believe end-user demand is Price: High,Lo w, Close( US$)
ELECTRONICS FOR I MAGING INC (EFII)
Relative to S&P 500
160
improving, which should be a near-term positive for ink sales. However, we 30
140
believe hesitancy toward large printer purchases remains. 25

120
20

Impact 15
100

Positive – We are increasing our CY2010 and CY2011 revenue and EPS 80
10
estimates based on better-than-expected end-user demand. For the March
5 60
quarter, we believe our $106.5 million revenue and roughly break-even EPS 40
Volum e ( mln)
40

estimates are reasonable and expect any upside to revenues to come from 20 20

stronger-than-expected ink sales.


0 0
2005 2006 2007 2008 2009
La st Da ta Po int: Ap ril 1 2, 2 01 0

Forecasts Valuation/Financial Data


For CY2010, we are increasing our EPS estimate to $0.34 from $0.32 (FY-Dec.) 2008A 2009A 2010E 2011E
EPS Pro Forma $0.73 -$0. 22 $0.34 $0.67
(consensus - $0.33). For CY2011, we are increasing our EPS estimate to P/ E 35.4x 18.0x
First Call Cons. $0.34 $0.72
$0.67 from $0.63 (consensus - $0.72). EPS GAAP -$0.24 -$0. 07 -$0.73 -$0.28
FCF $0.28 -$0. 57 $0.25 $0.60
P/ FCF 48.2x 20.1x
Valuation EBITDA ($mm) $83 $12 $40 $59
EV/EBITDA 5.7x 3.9x
We are increasing our target price to $12.50 from $12, which is based off Rev. ($mm) $560 $401 $470 $525
11x-12x our CY2011 EPS estimate, minus interest income, plus cash. EV/Rev 0.5x 0.4x
Quar ter ly EPS 1Q 2Q 3Q 4Q
2009A -$0.08 -$0. 12 -$0.05 $0.05
2010E $0.00 $0. 05 $0.09 $0.19
Recommendation
Balance Sheet Data (12/31/09)
We remain MARKET PERFORM rated. We believe a healthy recovery of Net Debt ($mm) -$310 TotalDebt/EBITDA nm
Total Debt ($mm) -$240 EBITDA/Int Exp na
inkjet sales is already priced into the stock. We do not see enough earnings Net Debt/Cap. nm Price/Book 1.0x
growth to move EFI materially higher from its current levels. Notes: All values in US$.
Source: BMO Capital Market s estimates, Bloomberg, FactSet, Global
Insight, Reuters, and Thomson Financial.

Changes Annual EPS Annual FCF Quarterly EPS Target


2010E $0.32 to $0.34 2010E $0.04 to $0.25 Q4/10E $0.18 to $0.19 $12.00 to $12.50
2011E $0.63 to $0.67 2011E $0.30 to $0.60

Please refer to pages 6 to 9 for Important Disclosures, including the Analyst's Certification.
April 13, 2010

Qualcomm Communications Equipment


(QCOM-NASDAQ)
Tim Long
Stock Rating: Outperform BMO Capital Markets Corp.
212-885-4101
Industry Rating: Market Perform tim.long@bmo.com
Kevin Manning Ari Klein
212-885-4102 212-885-4103
kevin.manning@bmo.com ari.klein@bmo.com

Securities Info
Tweaking Numbers Ahead of Quarter; Expect Price (13-Apr) $42.30 Target Price $54
Conservative Guidance 52-Wk High/Low
Mkt Cap (mm)
$50/$35
$71,089
Dividend
Yield
$0.76
1.8%
Shs O/S (mm, BASIC) 1,681 Float O/S (mm) 1,654
Options O/S (mm) na ADVol (30-day, 000s) 25,770

Event Price Performance


We are raising our numbers slightly as we wrap up the handset market P ric e: High, Low,Close(US$)
QUALCOMM INC (QCOM)
Relati ve to S &P 500
1 70
60
following Q1. We believe CDMA/WCDMA units were better than we had 55
1 60

1 50
expected and ASP pressure has stabilized. We raise our March estimates 50
1 40
45
within the pre-announced range, but our higher numbers for June are a penny 40
1 30

1 20
below consensus. In general, we believe the device unit environment is 35

30 1 10

positive and ASPs are stabilizing. We are expecting a strong second half of 25 1 00

2010, with MSM growth accelerating, and device units potentially coming in 20 90

15 80
above guidance. We believe management may begin to provide less clarity, 10 00
Volum e (mln)
1 000

particularly for ASPs, which may be an issue for some investors. 50 0 5 00

0 0
20 05 20 06 20 07 20 08 200 9
Impact Las t Dat a P oint: A pril 12, 2010

Neutral. We believe QCOM will speak more positively about device Valuation/Financial Data
volumes, which should quell some of the ASP concerns. We maintain our (FY-Sep.) 2008A 2009A 2010E 2011E
EPS Pro Forma $2.25 $1.90 $2.29 $2.58
OUTPERFORM rating despite the fact that June-quarter guidance may fall P/E 18.5x 16.4x
First Call Cons. $2.30 $2.53
below current consensus. EPS GAAP $1.85 $1.47 $1.82 $1.83
FCF $1.30 $3.85 $2.10 $2.23
P/FCF 20.1x 19.0x
Forecasts EBITDA ($mm) $4,603 $4,166 $4,236 $4,909
EV/EBITDA 21.3x 18.3x
We are raising our FY2010/2011 pro forma EPS estimates from $2.24/$2.55 Rev. ($mm) $11,130 $10,385 $10,635 $11,742
EV/Rev 8.5x 7.7x
to $2.29/$2.58
Quarterly EPS 1Q 2Q 3Q 4Q
2009A $0.31 $0.41 $0.54 $0.64
2010E $0.62A $0.57 $0.52 $0.56
Valuation
Balance Sheet Data (12/31/09)
Our price target of $54 assumes that the stock trades at 20x our pro forma Net Debt ($mm) $18,928 TotalDebt/EBITDA 0.0x
Total Debt ($mm) $199 EBITDA/IntExp na
EPS estimate for CY2011 Net Debt/Cap. 92.3% Price/Book 3.3x
Notes: All values in US$.
Source: BMO Capital Markets estimates, Bloomberg, FactSet, Global
Recommendation Insight, Reuters, and Thomson Financial.

We rate QCOM OUTPERFORM.

Changes Annual EPS Annual FCF Quarterly EPS


2010E $2.24 to $2.29 2010E $1.85 to $2.10 Q2/10E $0.55 to $0.57
2011E $2.55 to $2.58 2011E $1.88 to $2.23

Please refer to pages 4 to 6 for Important Disclosures, including the Analyst's Certification.
April 13, 2010
Communications Tim Long

Equipment BMO Capital Markets Corp.


212-885-4101
tim.long@bmo.com
Kevin Manning Ari Klein
212-885-4102 212-885-4103
Industry Rating: Market Perform kevin.manning@bmo.com ari.klein@bmo.com

Summary
Wireless Earnings Preview • We expect solid results from the handset segment in the
We expect a decent quarter for the handset space, with overall industry units March quarter, likely beating our better-than-seasonal
likely beating our better than seasonal 9% Q/Q decrease. QCOM and RIMM
estimate. Our global model calls for 345.5M units
are our only positive ratings in wireless.
(including “white box”), down 9.3% Q/Q and up 28.5%
 QUALCOMM reports on 4/21. QCOM recently provided positive Y/Y. We think seasonality is becoming less of a factor
EPS and revenue guidance, although it did not update units and as emerging markets have grown.
ASP estimates. Today, we raised our QCOM estimates owing to • We are modeling a typical 2Q, with units up 3.6% Q/Q
positive checks on March-quarter WCDMA/CDMA units and ASPs to 358M phones.
(see our separate QCOM note). We rate QCOM OUTPERFORM.
• We expect most of our companies to report March-
 Nokia reports on 4/22. We believe units could beat our estimate for quarter results around consensus. Guidance should be
the quarter at the low end, but don’t see the potential for a recovery more mixed as the industry has become more
until Smartphone strategy improves, likely now not until 3Q. We competitive.
rate NOK MARKET PERFORM. • We have an OUTPERFORM rating on QCOM. They

 Sony Ericsson reports on 4/16 and Ericsson on 4/23. SEMC and preannounced positively, and we raised our estimates
ST-Ericsson should continue to adversely affect results. We rate the today based on positive WCDMA/CDMA checks for the
shares MARKET PERFORM. March quarter.

 Motorola reports on 4/29. Focus should be on handset results and • We have MARKET PERFORM ratings on NOK, MOT,

Android units, ASPs, margins, device launches and the spinoff. We ERIC, NVTL, and SWIR. We need to see signs of high-

rate MOT MARKET PERFORM. end Smartphones and improved OS from NOK, more
Android devices for MOT and are concerned about
 Sierra Wireless is expected to reports the week of 5/3. We are in
integration and the infrastructure market for ERIC. We
line with consensus for 4Q. We are below consensus for 2Q as we
have a longer-term downward basis for both SWIR and
expect greater competition and margin pressure to negatively affect
results. We rate SWIR MARKET PERFORM. NVTL owing to competitive issues.

 Novatel Wireless is expected to reports the week of 5/10. We


believe results will be in line with consensus. Our 2Q estimates are
below consensus. We rate NVTL MARKET PERFORM.

Refer to pages 25 to 26 for Important Disclosures, including Analyst's Certification.

Page 1 April 13, 2010


April 14, 2010

Intel Semiconductors
(INTC-NASDAQ)
Ambrish Srivastava, PhD
Stock Rating: Outperform BMO Capital Markets Corp.
415-591-2116
Industry Rating: Market Perform ambrish.srivastava@bmo.com
Emily Scudder
415-591-2130
emily.scudder@bmo.com

Not Your Father’s Intel Securities Info


Price (13-Apr) $22.76 Target Price $28 
52-Wk High/Low $23/$15 Dividend $0.63
Mkt Cap (mm) $125,726 Yield 2.8%
Event Shs O/S (mm, BASIC) 5,524 Float O/S (mm) 5,335
Options O/S (mm) na ADVol (30-day, 000s) 53,892
Margins are not collapsing, and appear to be headed higher. And boy, it is Selected Bond Iss Ind Prc Rat’g Mdys/S&P YTW Spread
nice to not ask for a multiple expansion on a stock for it to work. Intel INTC 2.95% '3 5 99 na / A- 3.01% -169bp
INTC 3.25 '39 121 A2 / A- 2.24% -246bp
delivered very strong results for 1Q with guidance slightly better than Bond data from Bloomberg.

seasonal. 1Q EPS came in at $0.43 vs. our $0.36 estimate and revenues were Price Performance
$10.3 billion vs. $9.7 billion, down 3% q-q, better than seasonal aided P ric e: High, Low,Close(US$)
INTEL CORP (INTC)
Rel at ive to S&P 500
1 20
largely by sequentially better ASPs. 30
1 10

25 1 00
Impact
90
Quite positive. The bears on INTC would have you sell the stock the moment 20

80
margins hit 60%, which was in 4Q09. Our investment case for INTC has 15
70
been predicated on our view that the company can sustain margins in the
10 60
60%'s longer, given a reduced cost structure and better mix. Intel is 30 00
Vol ume (mln )
3 00 0

delivering on that front, and then some, in our view. Margins for the year are 20 00 2 00 0

now expected to be at 64% vs. prior guidance of 61%. Inventory appears lean 10 00 1 00 0

0 0
20 05 2 006 20 07 2 008 20 09
as well, including on Intel’s balance sheet, where inventory stayed essentially Las t Data Point : April 12, 2010

flat. On the top-line front, Intel is showing some early signs of a corporate Valuation/Financial Data
recovery in its non-server business. (FY-Dec.) 2008A 2009A 2010E 2011E
EPS GAAP $0.92 $0.78 $1.85 $2.00
P/E 12.3x 11.4x
First Call Cons. $1.68 $1.83
Forecasts
FCF $1.00 $1.18 $1.87 $2.11
Our 2011 estimates get pulled in to 2010. We are raising 2010 to $1.85 vs. P/FCF 12.2x 10.8x
EBITDA ($mm) $14,276 $13,691 $19,784 $21,209
$1.70 (consensus $1.68) and 2011 goes to $2.00 vs. $1.85 (consensus $1.83). EV/EBITDA 5.7x 5.3x
Rev. ($mm) $37,586 $35,127 $43,091 $45,993
EV/Rev 2.6x 2.5x
Valuation Quarterly EPS 1Q 2Q 3Q 4Q
2009A $0.11 -$0.07 $0.33 $0.40
We are raising our price target to $28 from $26 based on a P/E multiple of 2010E $0.43A $0.42 $0.47 $0.52
14x our 2011 EPS estimate of $2.00. Balance Sheet Data (12/31/09)
Net Debt ($mm) -$12,472 TotalDebt/EBITDA 0.1x
Total Debt ($mm) $2,221 EBITDA/IntExp na
Net Debt/Cap. nm Price/Book 3.0x
Recommendation Notes: All values in US$.
We rate INTC shares OUTPERFORM. Source: BMO Capital Markets estimates, Bloomberg, FactSet, Global
Insight, Reuters, and Thomson Financial.

Changes Annual EPS Annual FCF Quarterly EPS Target


2010E $1.70 to $1.85 2010E $2.01 to $1.87 Q2/10E $0.38 to $0.42 $26.00 to $28.00
2011E $1.85 to $2.00 2011E $1.96 to $2.11 Q3/10E $0.46 to $0.47
Q4/10E $0.50 to $0.52

Please refer to pages 8 to 10 for Important Disclosures, including the Analyst's Certification.
Important Disclosures
Analyst'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 about
the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific
recommendations 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 generating
new 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 analysts
may 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 BMOCM US BMOCM US BMOCM US BMOCM BMOCM First Call
Category BMO Rating Universe* IB Clients** IB Clients*** Universe**** IB Clients***** 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 as
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 each
company. 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 Capital
Markets, 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 via
FIRST CALL, FIRST CALL Research Direct, Reuters, Bloomberg, FactSet, Capital IQ, and TheMarkets.com. All of our research is made widely
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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.
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“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 Ltée./Ltd., BMO Capital Markets Ltd. in the U.K. and BMO Capital Markets Corp. in the
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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 change
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Page 2 February 17, 2010