On August 18, Williams declared that the Federal Energy Regulatory Commission (FERC) had approved its proposal to expand its Transco natural gas pipeline to serve markets in the northeastern United States. The extension project is designed to increase Transco s firm transportation capacity by 142,000 dekatherms per day.

For 2008, Williams increased its profit guidance to $3.15 $3.65 billion and EPS guidance to $2.35 $2.80, up from $3.1 $3.65 billion and $2.30 $2.80, respectively. For 2009, the company guided towards earnings in the $2.925 $3.825 billion range and EPS in the range of $2.10 $2.95.

KEPCO Awaits Korean Restructuring

Korea Electric Power Co., or KEPCO (KEP) registered a net loss in the first half of 2008, bogged down by substantial increase in foreign currency valuation loss, escalating fuel cost and increased price of purchased power.

Also falling Korean Won against the U.S. dollar is affecting import-intensive companies such as utilities with significant dollar-denominated debt. Going forward we expect much improved performance and modest price appreciation.

KEPCO is the dominant player in Korea's electricity sector, and the Korean company continues to be well-positioned to capitalize on growth opportunities in this market and to benefit from the current industry restructuring initiated by the Korean government.

However, in the scenario of volatile global energy prices, Chinese embargo on coal exports and higher fuel costs, stagnation of electricity rates, KEPCO continues to face risks of increasing costs, thereby often reporting lower operating earnings and net income. Therefore, we maintain our Hold recommendation on KEPCO common stock with a six-month target price of $17.

South Korean Ministry of Strategy and Finance in a statement in July 2008 said it will not seek the privatization of companies in the electricity, gas, tap water and health insurance sectors. This will affect the privatization of subsidiaries of Korea Electric Power Corporation.

Also myriad uncertainties weigh on the company's stock valuation, including risk of the Korean government's efforts to restructure the country's electricity sector, the need to raise tariffs, volatile oil and coal prices, and constant exchange rate and interest rate exposure. Progress of the Korean government's efforts to restructure the country's electricity sector has been slower than initially expected.

Anaren with Near-Term Challenges

Anaren, Inc. (ANEN), a leading provider of microwave components and subassemblies for the wireless and defense industries, is challenged with recent indications of cost overrun as a result of supply-chain issues and other production related conditions.

An anticipated sales decline for Anaren's high-margin IED products, together with ongoing macro-economic downturn in the global economy, are likely to generate earnings fluctuations over the near-term. The company announced mix financial results for its fourth quarter of fiscal 2008 (ended June 30). Net income was significantly below our estimates despite a ramp-up in sales.

Anaren has a strong financial position and diversification into multiple vertical markets spread sector-specific risk during turbulent market conditions. It has a robust pipeline with a series of next-generation products diversified into six to eight product platforms. The new products are expected to be marketed starting in the second quarter of fiscal 2009.

The company is currently trading at 17.4x estimated forward earnings for fiscal 2009. This is at a premium to the S&P 500 but at a discount to the industry group average. We maintain our Hold recommendation and the same valuation target until the company shows signs of overcoming cost related issues. Our six-month target price of $12 based on a P/E multiple of 19.4x our fiscal 2009 earnings estimates.